| If you use part of your home for business, you may be able to deduct
expenses for the business use of your home. These expenses may include
mortgage interest, insurance, utilities, repairs, and depreciation. The home
office deduction is available for homeowners and renters, and applies to all
types of homes, from apartments to mobile homes. There are two basic
requirements for your home to qualify as a deduction: 1. Regular
and Exclusive Use.
You must regularly use part of your home exclusively for conducting
business. For example, if you use an extra bedroom to run your online
business, you can take a home office deduction for the extra bedroom.
2. Principal Place of Your Business.
You must show that you use your home as your principal place of business.
If you conduct business at a location outside of your home, but also use
your home substantially and regularly to conduct business, you may qualify
for a home office deduction. For example, if you have in-person meetings
with patients, clients, or customers in your home in the normal course of
your business, even though you also carry on business at another location,
you can deduct your expenses for the part of your home used exclusively and
regularly for business. You can deduct expenses for a separate free-standing
structure, such as a studio, garage, or barn, if you use it exclusively and
regularly for your business. The structure does not have to be your
principal place of business or the only place where you meet patients,
clients, or customers.
Generally, deductions for a home office are based on the percentage of
your home devoted to business use. So, if you use a whole room or part of a
room for conducting your business, you need to figure out the percentage of
your home devoted to your business activities.
Additional tests for employee use. If you are an
employee and you use a part of your home for business, you may qualify for a
deduction for its business use. You must meet the tests discussed above
plus:
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Your business use must be for the convenience of your employer, and
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You must not rent any part of your home to your employer and use the
rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you
cannot deduct expenses for the business use of your home.
For a full explanation of tax deductions for your home office refer to
Publication 587, Business Use of Your Home. In this publication you will
find:
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The requirements for qualifying to deduct expenses for the business use
of your home (including special rules for storing inventory or product
samples).
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Types of expenses you can deduct.
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How to figure the deduction (including depreciation of your home).
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Special rules for daycare providers.
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Selling a home that was used partly for business.
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Deducting expenses for furniture and equipment used in your business.
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Records you should keep.
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The rules in the publication apply to individuals. |
