To claim expenses for business use of the home on your Schedule C, part of your home must be used regularly and exclusively as one of the following:
- The principal place of business for your business or trade
- The place where you meet and deal with your clients, customers, or patients during the normal hours of your business or trade, or
- In connection with your business or trade, if you use a separate structure that is not attached to your home,
- On a regular basis for certain storage use
- As a day care facility
Under the principal-place-of-business test, you must determine that your home is the principal place of your trade or business after considering where your most important activities are performed and most of your time is spent.
Personal Use VS Business Use
Where the Exclusive Use Requirement applies, you cannot deduct business expenses for any part of your home that is used for both business and personal purposes.
Example: If you are an attorney and use the den of your home to consult with clients and also for entertaining guests, you may not deduct any business–use–of–your–home expenses.
Deductible expenses for business use of your home include the prorated portion of real estate taxes, deductible mortgage interest, depreciation, insurance, maintenance, rent, repairs, utilities related to the square footage of your home used for business purposes. You may not deduct expenses for landscaping services in general or for painting a room not used for business.
Deductions also may be taken for regular use of a residence for business storage purposes or for the provision of day care services; exclusive use is not required in these cases. You also may take deductions if you rent out your residence.