Can I Claim a Tax Deduction For My Home Office?
If you are using part of your home to run your business, you may be able to deduct expenses for the business portion of your home. This tax deduction is available for both homeowners and renters. Here are the requirements:
Trade or Business Use
Principal Place of Business
Also, the space may qualify as your principal place of business if it is used by your patients, clients, or customers to meet with you in the normal course of your business, or the space is in a separate structure not attached to your home.
Calculating the tax deduction: You will need to know how many square feet you use for business and the number of square feet in the entire home. Then you can calculate the business percentage to apply to your home expenses, which will include rent or mortgage interest, property taxes, insurance, repairs & maintenance, homeowner association dues, housekeepers, and other items. Also, if you are a homeowner, the cost or value of the business portion of the house will be depreciated over 31.5 years.
Instead of the exact method, you can deduct a flat amount of $5 per square foot, with a limit of $1,500. Usually, the exact method produces a higher tax deduction.
If you have questions / comments or would like to enlist the tax services of an experienced CPA tax accountant, please contact me.
M. Bess Kane, CPA