How Much of a Mortgage Can I Claim for a Home Office?
When you work from home, either as a self-employed individual or as an employee, you may be eligible for a home office deduction. With this type of deduction, you get to deduct a portion of the mortgage payments that you make each year. The size of the deduction depends on the size of your office.
Other People Are Reading
-
Requirements
-
If you simply work from home, this does not necessarily mean that you get to take a deduction for a home office. You must have a dedicated space in your house that is specifically for work. For example, if you simply sit in the recliner in your living room and work, you cannot take a deduction for a home office since the space is used for your living room and for work. You must have a specific location in the house that is only used for work.
Taking a Percentage
-
One way to calculate how much of a deduction you can take is to use a percentage of the square footage of your house. For this method, determine the square footage of your office by multiplying the length times the width. Then divide that number by the square footage of your home. The number you come up with represents the percentage that you get to deduct from your mortgage payment. For example, if your office is 60 square feet and you have a 1,000 square foot house, you get to deduct 6 percent of your mortgage payment.
-
Number of Rooms
-
Another way to determine the home office deduction is to base it on how many rooms are in your house. For example, if you have 8 rooms in the house and one of them is your office, the deduction you take would be equal to 1/8 of your mortgage payment. If you use this method, the office should be close to the same size as the other rooms in the house.
Considerations
-
If you plan on deducting a portion of your mortgage payment, be sure that you do not embellish the numbers. When the Internal Revenue Service sees a home office deduction that seems very large, it could lead to an audit of your return. If the numbers do not add up in the audit, the deduction could be eliminated and you may have to pay late fees as a result. Do your best to be accurate when taking this deduction.
-
