Home Office Deductions: How to Get the Most out of your Home Office

Learn more about how to deduct some expenses from your home office.


If you have a home office, you may be wondering if you can take the home office deductions from your income tax. If you are self-employed and you use some of your home as your office or primary work area, then you probably can take the deductions. It can be tricky to figure some of this out, but it is worth the time.

Does your space qualify as a home office?
The IRS uses two terms that determine whether or not a space is truly a home office or not: exclusively and regularly. ‘Exclusively’ means that some part of your home is used ONLY for your business. For instance, if you have set up space in your garage for your office but you are still using part of that garage for storage of winter clothes or toys, then it is not being used exclusively for your office. Thus, you can’t say your garage is your home office. The kitchen table doesn’t qualify either. But if you have cleaned out a bedroom and made it your office, then it would qualify.

‘Regularly’ means that you are using your office space on a regular basis. You can’t take the deduction if you only work there a couple of weeks a year, for example. You must have used this space on a consistent basis. If you use that space for, say, six months out of every year, then you can only calculate the deduction for one half of that year.

One exception is if you use part of your home to store inventory. You can take the deduction even if you used that space for some personal use when your inventory ran low.

What percentage of your home are you using?
In order to take the deduction, you have to determine just how much of your home is dedicated to your home office. This can be done in one of two ways. First, if you are using a bedroom in your home, and your home has six rooms, then you are using 1/6th or 16 percent of your home for your office. The other way is based on square footage. If your home is a 2,000 square foot home and your office is 200 square feet of that area, then you are using 10 percent.

What deductions can I take?
If you can qualify for the home office deductions, then you can take many deductions. Some are:

• Direct expenses: money you spend to maintain or repair the office area.

• Indirect expenses: Whatever percentage of your home is your office, you can take that percentage off things like your mortgage or rent, utilities and insurance.

• Interest and property taxes can be deducted by the percentage of your office area

• Depreciation: This can all be tricky, and if you don’t want to face an audit from the IRS you may need to have a tax professional figure it all out for you. You need to keep records of everything.