Self-employed individuals and business owners that use an area of their home for business may be able to take a tax deduction for costs associated with a home office.
In order to claim the home office deduction, the area in your home must be used exclusively for business on a regular basis. The area does not need to be physically separated from areas used personally. A dinning room table use for both personal and business use would not count as the area must be used exclusively for business.
To claim the home office deduction, you’ll need to determine the square footage of the area used for business and the square footage of your entire home. A portion of the costs of your home can be deducted in proportion to the business square footage relative to the total square footage of your entire home.
Common Home Office Expenses Include:
-Rent payments or mortgage interest and real estate taxes if you own your home
-Utilities (electric, water, and gas)
-Homeowners insurance or renters insurance
-Homeowners association or condo dues
-Depreciation if you own your home – a portion of the cost of your home allocated to the area used for business is deducted over a number of years.
Don’t include: amounts where the business use is not representative based on the square footage of the home office relative to the entire home, such as internet access, telephone, etc.
Contact me to discuss this topic in further detail
Please note: the information on this website is intended to provide general advice to start the discussion with your tax professional. The information on this website may not apply to your specific situation. Only an experienced professional with the details of your specific situation can advise you on making the best decision. Contact me or your tax professional to discuss the information on this site to make an informed decision.