Claiming Additional Deposit

[familyschoolcare]

So my landlord required me to pay an additional deposit of $1500 because I opened a licensed daycare. We lived in the house for nearly 2 years before I was granted my license and he asked for the deposit. Can I claim this as a start up cost?

[TomCopeland]

rent deposit

You should deduct this as normal rent. That is, multiply the amount by your time-space percentage and claim it on Form 8829 as rent. If you later get the deposit back, then report it as income that year.

[familyschoolcare]

Just to clarify I only get to claim part of it even with, having a paper trail proving the only reason for it is the day care? That does not seam fair.

[TomCopeland]

rent

You are right. I was wrong. You can deduct 100% of this cost because it is directly related to your business. Try to get the landlord to put something in writing that says the deposit is because of your business.

[familyschoolcare]

Thanks I already have it in writing that the deposit is because of the business. He originally tried to stop me from doing day care at all. However, that is not how it works in California.