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Business Use of Home

Principal Place of Business

Whether you are self-employed or are an employee, you may be able to deduct certain expenses for the part of your home you use for business despite the general denial of business expense deductions for the home.

To deduct expenses for business use of the home, part of your home must be used as one of the following:

  • Exclusively and regularly as your principal place of business for your trade or business
  • Exclusively and regularly as a place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business; or
  • A separate structure used exclusively and regularly in connection with your trade or business that is not attached to your home
  • On a regular basis for certain storage use
  • For rental use
  • As a daycare facility

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.

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.

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
  • 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.
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