Business Use of Home
If you used your home for your job or business, you may be able
to deduct expenses related to the part of your home that was used
for business.
Principal Place of Business
You must determine where the principal place of your business is
before deducting business use of home expenses. The physical
location of your trade and business where the most important
activities are performed, and the most time is spent, is generally
the principal place of your business. However, your home will also
qualify as your principal place of business if both of the
following are true:
- You use a portion of your home regularly and exclusively for
administrative or management activities of your trade or
business.
- You have no other fixed location where you conduct substantial
amounts of administrative or management activities.
Requirements to Deduct Expenses
To deduct any business-related home expenses, you must use a
portion of your home regularly and exclusively for either of these
purposes:
- as the principal place of business for your trade or
business
- as the place where you meet and deal with your patients,
clients, or customers in the normal course of your trade or
business
Similarly, to deduct a structure that is separate and not
attached to your home, it must be used in connection with your
trade or business.
Unless your home is used as a day care or as a storage place for
inventory or product samples related to your business, any area of
your home that is used for both personal and business purposes does
not qualify for the business use of home deduction.
If you are an employee, additional rules apply:
- Your home must be used for the convenience of your
employer.
- You cannot rent any part of your home to your employer and use
the rented part to perform services as an employee.
Qualifying Expenses
Only certain expenses related to the use of your home qualify as
an expense for the deduction:
- Real estate taxes
- Deductible mortgage interest
- Rent
- Casualty losses
- Utilities
- Insurance
- Depreciation
- Maintenance and repairs
When figuring the amount of expenses you can deduct, only
include amounts that are solely attributable to the portion of your
home that was used for business. Use either of the following
methods to figure the percentage:
- Divide the square footage of the room used for business by the
total square footage of the house.
- If the rooms in the house are all near the same size, divide
the number of rooms used for business by the total number of rooms
in the house.
For more information, see IRS
Publication 587.