Home Office Deduction

10 Jan

If you work out of your home you may be able to claim a deduction for “business use of your home“ expenses. If you meet the specific requirements, you can deduct a percentage of various costs such as utilities, rent, insurance, depreciation, mortgage interest, real estate taxes, and repairs. You can also deduct expenses for improvements of your home office.

You must meet the following requirements to qualify for the home office deduction:

  • Part of your house must be used as a principal place of business.

You must meet your clients at home, or use a separate structure on your property exclusively for business purposes. You cannot take a deduction if you use your home for a profit-seeking activity that is not a  business.

  • You must regularly use part of your home exclusively for business.

You must regularly use a room or other separately identifiable area of your home only for your business. You do not meet this requirement if you use the area for both business and personal purposes.

Even if you meet all the requirements, your deduction may be limited. You can deduct your income expenses only to the extent of gross business income, reduced by business expenses unrelated to the home. Any expenses that exceed that amount may be carried forward.

If you don’t meet the home office deduction requirements you can still deduct some business expenses that you incur at home such as a business telephone line, office supplies, equipment, etc.


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