• real estate taxes, mortgage interest, rent
• casualty losses, utilities, insurance
• depreciation, maintenance, repairs

To claim expenses for the business use of your home, you must meet both of the following tests.

1. The business part of your home must be used exclusively and regularly for your trade or business.
2. The business part of your home must be:
   
   • Your principal place of business, or
   • A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or
   • A separate structure (not attached to your home) used in connection with your trade or business.

   In general, because of the exclusive use rule, you cannot deduct business expenses for any part of your home that you use for both personal and business purposes.

   You do not have to meet the exclusive use test for the part of your home that you use regularly either for the storage of inventory or product samples, or as a daycare facility.

   When figuring the amount you can deduct for the business use of your home, you should calculate the percentage of business use either by the comparing the square footage of the entire home to the square footage of the portion used for business or by comparing the total number of rooms in the home to the number of rooms used for business. Once you have calculated the percentage of business use, you can apply that percentage to your home expenses, to arrive at your business use of home deductions.

   Types of Expenses

   The part of a home operating expense you can use to figure your deduction depends on whether the expense is direct or indirect. Direct expenses are attributable to the business portion only while indirect expenses are attributed to the entire home. Consequently, direct expenses may be deducted in full while indirect expenses are deducted according to the business percentage.