finance5 sections · 30 items

Home Office Deduction Cheat Sheet

Simplified vs regular method comparison, eligibility requirements, and deduction calculations for the home office tax deduction.

Eligibility Requirements

Item	Value	Notes
Exclusive use	Dedicated space for work only	No dual-purpose rooms
Regular use	Used consistently for business	Not occasional
Principal place of business	Where you primarily work	Or meet clients regularly
Who qualifies	Self-employed / 1099 only	W-2 employees generally do NOT
Separate structure	Qualifies if used for business	Does not need exclusive use

Item	Value	Notes
Rate per square foot	$5.00/sq ft	Set by IRS — no receipts needed
Maximum area	300 square feet	Max deduction = $1,500
Max deduction	$1,500/year	300 sq ft × $5
Mortgage interest	Still deductible on Schedule A	Full amount, not reduced
Property taxes	Still deductible on Schedule A	SALT cap of $10K applies
No depreciation	Cannot depreciate home	Avoids depreciation recapture

Item	Value	Notes
Business %	Office sq ft ÷ total home sq ft	Apply this % to expenses
Mortgage interest	Business % deductible	Remainder on Schedule A
Property taxes	Business % deductible	Remainder on Schedule A
Utilities	Business % of electric, gas, water	Internet if used for work
Insurance	Business % of homeowner's/renter's	Including fire, theft
Repairs (office only)	100% deductible	Must be office-specific repairs
Repairs (whole house)	Business % deductible	E.g., new roof, HVAC
Depreciation	Business % of home value	39-year straight-line for home

Item	Value	Notes
Guest room = office	Not allowed	Must be exclusive use
Claiming as W-2 employee	Not allowed since 2018	TCJA eliminated for employees
Including personal expenses	Audit risk	Strict business-use only
Forgetting depreciation recapture	Owe tax when selling	Even if you did not claim it
No documentation	Deduction disallowed	Keep photos, measurements, records

Tip: Use landscape orientation for wider tables

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