Business relocation can be one of the most exciting and challenging phases of your business. A core question that immediately pops into one’s mind is, Are office relocation expenses tax deductible? If you can deduct these expenses, then that could make all the difference in the net business expenses and maximize tax savings for the office move.
Understand The Deductible Office Relocation Expenses
When determining whether office relocation expenses are tax deductible, realize that not all costs for moving into a new office result in a claim. The IRS provides a guideline on what may be claimed for an office relocation with your tax bill.
Are Office Relocation Expenses Tax Deductible?
Most common expenses for this purpose do qualify. They include:
- Moving Costs: Normally, moving costs, including such items as packing, shipment, and insurance, are considered tax deductible. The moving costs will be vital to the business relocation tax deductions.
- Storage Costs: Temporary store expenses, in case your move requires them, are also deductible. This can be key to maximizing your tax savings for office moves.
- Travel costs: You can deduct travel and/or accommodation costs for employees who travel as part of the relocation and who are directly involved in the move.
Expenses That Are Not Deductible
While some might be thinking, “Are office relocation expenses tax deductible?” it’s also handy knowing what the expenses aren’t:
- Property Acquisition or Improvement Costs: Buying new office space or making major improvements both fall out of the business relocation tax deduction basket. These are often capital investments that can be amortized.
- Employee Relocation: Employee moving expenses cannot be deducted as a rule, but there are exceptions. Recent changes in the tax laws have reduced or eliminated the deduction, except for people in the Armed Forces on active duty.
How To Get the Most From Business Relocation TAX DEDUCTIONS
The following are some of the strategies that can be considered to maximize your business relocation tax deductions and to ensure significant tax savings for office moves:
- Keep Detailed Records: For any expense to be considered for your business relocation tax deductions, you need to maintain proper records. These include receipts, invoices, and detailed documentation. Therefore, Proper records will help determine whether office relocation expenses are tax deductible.
- Consult with a Tax Professional: To walk you through the details of the tax-deductible status of your office relocation expenses, you’re strongly encouraged to find a tax professional. They will lend their expertise to help you maximize your business relocation tax deductions according to IRS guidelines.
- Resiliently Plan Your Move: Planning your office relocation at an inappropriate time can negatively impact your office move tax savings. By careful timing when you incur costs, you can maximize business relocation savings and better determine whether your office relocation expenses will be deductible in the current tax year.
Advantages Of Using A Tax Professional
The process of determining the deductibility of office relocation expenses is intricate. The services of the tax professional come with the following benefits :
- Expertise: These professionals understand the deductions allowed with business relocation, enabling you to get informed of all the deductions you qualify for, especially those that can allow you the most tax savings with an office transfer.
- Accuracy: These professionals will provide you with exactly what you need to determine which of your office relocation costs can be deducted, preventing costly mistakes.
- Time Savings: A tax professional keeps you active in some of your business’s most important areas since he or she takes charge of the complexity of all the business relocation tax deductions.
Conclusion
Are Office Relocation Expenses Tax Deductible? This question goes back to which expenses qualify for deduction and how one can maximize these deductions. Proper planning, record-keeping, and a tax professional can help a business relocating its offices maximize its business relocation tax deductions and realize substantial tax savings on office moves.
At Hercules Facility Solutions, we are specialists in helping businesses through the dilemma of relocating offices, including the potential for tax-deductible office relocation expenses. Reach out to us today to learn more about how we can help you and discuss how to maximize business relocation tax deductions.