Expense CategoriesBusiness Use of Your Home

To deduct expenses related to the part of your home used for business, you must meet specific requirements. Even then, your deduction may be limited. To qualify to deduct expenses for business use of your home, you must use part of your home:

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

Example: You are a graphic designer. You operate your business out of your home. Your home qualifies as your principal place of business for deducting expenses.

Example: Sam, a self-employed attorney, works 3 days a week in a rented office, then works 2 days a week at home, in a home office used only for business. Sam regularly meets clients there. The home office qualifies for a business deduction because Sam meets clients there in the normal course of their business.

Using Actual Expenses:

If you do not or cannot elect to use the simplified method for a home, you will figure your deduction for that home using your actual expenses. You will also need to figure the percentage of your home used for business and divide the expenses of operating your home between personal and business use. These expenses generally include (but are not limited to) the following.

• Depreciation
• Insurance
• Rent
• Repairs
• Security system
• Utilities and services

Example: You use 240 square feet for your office of your 1,200 square feet home. Your office is 20% (240 ÷ 1,200) of the total area of your home. Your business percentage is 20% that you can claim as a business expense of the total home expenses.

Learn More:

• IRS website: Business Use of Your Home