My understanding is hobby expenses are not deductible.
Gambling losses are and I guess that could be a hobby.
Anyho back to deductibles IF you are audited and have several years of deficits for your hobby you better have a business plan that will show (on paper at least) that you intend and can make profit. Very dicey for small operation meat producers. . . . .
peanut yes costs and repairs to a section of the home used for business are deductible.
But it has to be separate from the home. Separate entry way and a defined space closed off (a doorway counts as separate) from the normal household area. So a bathroom unless available to the general public wouldn't qualify. But improvements and repairs can be deducted from the capitol gains at the time of the sale of the home.
disclaimer: this is just my simple understanding of the rules and as the public school system and I parted ways at an early age should be taken with a grain of salt.
sorry rider but this is not my experience
I have been self employed for 45 years both as a sole trader and later as a Company Director of 3x Limited Companies employing up to 27 employees. I have on many occasions submitted my own accounts to Companies House HMCE ,...VAT returns and Corporation tax!.
You can claim partial tax relief on expenses for any part of your home provided you run your business from home or use your home for any part of running your business which obviously includes book keeping and financial aspects .I have done so for the past 45 years up until my retirement in 2009
The rooms you use
do not have to be separate or dedicated to business use .You should claim a reasonable proportion of the use pro rata so if you work an 8 hour day then you should claim half of the expense for that period ie 1/2 of 1/3rd ie half of 24 hrs divided by 3 because the facility is also in use by members of your household and visitors. Its a question of being reasonable and applying commonsense.
As for availabilty to the Public ...nonsense...There are many types of business that have no visiting customers and no provision is needed nor provided, or used by customers .
Remember we are talking about private business not Public Service buildings and services like Museums and public toilets .
When it comes to hobbies you should take advice about when income from them is classified as 'Income' if you sell your car to upgrade obviously that is not classified as taxable income but if you frequently buy bikes to restore /repair with a view to selling them then that is classed as taxable income whether you make a loss or profit it must be declared.
The key to this is to be sensible. You obviously cannot claim more expenses that your turnover otherwise the IRS will say '
well how did you manage to spend 20,000 dollars in your business when according to you your business only turned over 17,500 dollars ???? .Naturally you could claim there are bad debts and you run an overdraft at the bank and your family lent you money to keep you afloat but eventually it will catch up with you .
The other question they will ask is
'Well if you claim to have made a loss this year of $x dollars how did you manage to buy food pay the rent and live ? you clearly haven't earnt enough to live.!'
They are not stupid. provided your annual returns do not trigger any warning bells then the chances are you'll not get audited and your figures will be accepted by the HMCE IRS etc
