Home Office Deduction

If you use part of your home exclusively and regularly for business, you may qualify for the home office deduction. This deduction lets eligible taxpayers write off certain home expenses on their tax return, which can help lower their taxable income.

Here’s what you need to know to determine if you can claim the home office deduction ⏩

• • Who Can Claim the Home Office Deduction?

    The home office deduction is available to both homeowners and renters, making it accessible regardless of your housing situation. Eligible professionals and businesses include self-employed individuals, freelancers, consultants, independent contractors, small business owners, and certain employees who meet IRS requirements. This means that a wide range of people—from accountants, writers, and designers to real estate agents, therapists, and online retailers—may qualify for this valuable tax deduction if they use part of their home exclusively and regularly for business.

     

    What Expenses Can You Deduct?

    There are several expenses that may be eligible for deduction, including:

     

    🏠 Mortgage interest

    🛡️ Insurance

    💡 Utilities

    🔧 Repairs

    🧰 Maintenance

    📉 Depreciation

    🏠 Rent

     

    Keep in mind, the amount you can actually deduct may be limited by IRS rules and your individual use.

     

    What Qualifies as a "Home"?

    For deduction purposes, the term "home" includes a wide range of properties:

     

    • House, apartment, condominium, mobile home, boat, or similar property

    • Structures on your property, such as an unattached garage, studio, barn, or greenhouse

     

    However, it does not apply to any part of your property used exclusively as a hotel, motel, inn, or similar business.

     

    Key Requirements for Qualification

    To claim the home office deduction, you must meet two main requirements:

     

  • 1. Exclusive and Regular Use

    A specific portion of your home must be used exclusively and regularly for conducting business. For example, if you use an extra room only for your business, you may qualify to deduct expenses for that room.

    • •  

         2. Principal Place of Business

      • Your home must be your principal place of business. You may also qualify if administrative or management activities are conducted at your home and you have no other fixed location to perform these duties. Even if you work outside the home at times, you can still qualify if your home remains your business headquarters.

         

      • You can also deduct expenses for a separate structure not attached to your home, like a workshop or garage, as long as it is used regularly and exclusively for business.

         

        Two Ways to Calculate Your Deduction

        Taxpayers who qualify can choose between two calculation methods:

        Simplified Option

        - Deduct $5 per square foot of your home that is used for business, up to a maximum of 300 square feet

        - The highest possible deduction with this method is $1,500

        Regular Method

        - Deduct expenses based on the percentage of your home used for business

        - If you use a full room or a section of a room, calculate its percentage of your home’s total square footage

        - Indirect expenses are deducted proportionally; direct expenses are deducted in full

         

        Contact Us

        If you’d like to discuss this tax planning opportunity or learn more about how exclusive home use for your business can help reduce your tax bill, schedule time with us at your earliest convenience.