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How Can I Take a Home Office Expense Tax Deduction?

There are two ways that your home office expenses can qualify for tax deductions:

  • Your home office is used exclusively and regularly as your principal place of business
  • Your home office is the place where you meet with your clients, patients, or customers during the normal course of business

How Can My Home Office Qualify as My Principal Place of Business?

In order for your home office to qualify as your principal place of business, you must spend most of your working hours in your home office and the majority of your taxable business income must be generated from activities conducted there.

Which Expenses at My Home Office Are Tax Deductible?

There are several types of expenses at your home office which are classified as tax deductible:

  • Tax return real estate tax
  • Mortgage interest
  • Utilities
  • Operating expenses
  • Depreciation

However, it is more complicated than just simple deductions for all of these expenses. You must use the following methods to determine your allowable total for tax deduction:

  • If the rooms in your home are not equal size, divide the number of square feet used for home office space by the number of total square feet of your home. Apply the resulting percentage to your tax deductible expenses to figure out how much of each expense actually stems from your home office.
  • If the rooms in your home are the same size, you may base your home office tax deduction on a comparison of the rooms used for home office space against the total number of rooms.

Are There Any Limits on the Amount I Can Deduct?

You may not take tax deductions that exceed the total amount of the net income gained from your home office use after the mortgage interest, real estate taxes, and any casualty or theft losses are taken away. If you have no income to claim, any tax deductions may be carried forward to the next taxable year.

Do I Need a Lawyer to Help Me with My Home Office Deductions?

Tax law is a very complicated and frustrating subject. To make matters worse, tax law changes every year. Contact an attorney if you need help understanding current tax law and how it affects your home office expense deductions. If you have questions regarding the deductibility of your expenses, or you need to go to tax court, an attorney can represent you and help minimize your income tax bill.

Photo of page author Kristen Johnson

, LegalMatch Legal Writer

Last Modified: 10-09-2014 01:30 PM PDT

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