Can I deduct home office expenses?

Home office expenses are often among the first discussed when the topic of deductions comes up. The home office deduction allows qualified taxpayers to deduct certain home expenses from their business income. To claim home office deductions as a business expense, taxpayers must regularly and exclusively use part of a home or separate structure on the property as a primary place of business.

Who qualifies for the home office deduction?

Employees don’t qualify. The Tax Cuts and Jobs Act suspended home office expenses for part of your home used regularly and exclusively for your work as an employee from 2018 through 2025. Unless Congress extends or makes this law permanent, it sunsets on January 1, 2026, so keep an eye on this.

However, if your trade or business is reported on Schedule C of your personal tax return, you may be eligible for the deduction. If applicable, the home office deduction is available whether you rent or own your home.

What type of qualified expenses can be deducted?

Examples of home expenses that taxpayers can deduct include:

  • Mortgage interest
  • Insurance
  • Utilities
  • Repairs
  • Maintenance
  • Depreciation
  • Rent

What is considered a “home”?

  • A home Includes a house, apartment, condominium, mobile home, boat, or similar property.
  • It includes other structures on the property, like an unattached garage, studio, barn, or greenhouse.
  • It does not include any part of the property used only as a hotel, motel, or other rental.

What qualifies my home as a deduction?

There are two main requirements for a home to qualify for the home office deduction.

  1. An exclusive part of the property must be where business is conducted consistently—for example, an extra room used only for business purposes.
  2. The taxpayer’s home must be the primary place of business. This requirement can also be met if administrative tasks completed at home cannot be done anywhere else. This means that someone who conducts business outside of their home but also uses their home for certain administrative tasks could still qualify.

If I qualify, how do I calculate my home office expense deduction?

There are two methods for calculating the home office expense deduction.

  • The simplified method has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
  • The Regular method allows deductions for a home office based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business must determine the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.

While the home office deduction is less widely available than in the past, this may soon change. If you currently use our home office in your unincorporated business, it can still yield significant tax benefits.