Exclusive Use Home Tax Deduction Information
Small business owners or employees who operate their business from home may be eligible to take home office tax deductions. The IRS details strict requirements for eligibility, so contact the IRS or a tax advisor when in doubt.
Other People Are Reading
-
Requirements
-
The home office must be used regularly and exclusively for your business, for conducting business or meeting with clients or suppliers. Storage used for business inventory also qualifies. Generally, if your home is the only place that you conduct business, you are eligible for the exclusive use home tax deduction.
Exceptions
-
A home day-care isn't held to the exclusivity requirement. Also, storage space may include personal items.
-
Employee Use
-
Employees who operate from within the home must do so for the convenience of the employer.
Deductions
-
Expenses eligible for deduction include real estate property taxes, mortgage interest, a portion of your rent and utilities, casualty losses, insurance, depreciation, maintenance and repairs that can't be classified as improvements.
Deduction Amount
-
For rent and utilities, you may deduct the amount that correlates to the square footage used. For example, if the rental home is 1,200 square feet and your home office and inventory storage space amounts to 400 square feet, you may deduct 30 percent or your rent and utilities.
Business Income
-
Deductions are limited in the event that your business expenses exceed your gross business income.
-
