The Home Office Deduction: Who Qualifies and How to Claim It
If you're self-employed and work from home, part of your rent or mortgage, utilities and insurance may be deductible. The rules are strict but simple once you know them.
By the Enrolled Agents and CPAs at A&W Tax Services · Updated
Who qualifies
The deduction is for self-employed people, freelancers, gig workers and small business owners. The space must be used regularly and exclusively for your business: a spare room used only as an office qualifies, a kitchen table doesn't. It must also be your principal place of business, or a place where you regularly meet clients. Storage space for inventory and licensed daycare facilities have their own rules.
W-2 employees who work from home generally can't take this deduction under current federal law, even if their employer requires remote work.
Two ways to calculate it
- Simplified method: $5 per square foot of office space, up to 300 square feet, for a maximum of $1,500. No depreciation and minimal record-keeping
- Regular method: the business percentage of your home (office square feet divided by total square feet) times actual costs such as rent, mortgage interest, property tax, insurance, utilities and repairs, plus depreciation if you own the home
Which method is better?
The regular method usually gives a larger deduction, especially for renters in larger spaces or homeowners with high costs, but it takes more record-keeping. If you own the home, depreciation claimed on the office may be taxed when you sell. The simplified method avoids that. You can choose either method each year.
Records to keep
- A floor plan or measurements of the office and the whole home
- Rent or mortgage interest statements, property tax bills and insurance
- Utility and internet bills
- Receipts for repairs to the office or the whole home
- Photos showing the space is used only for business