When May I Deduct the Business Use of Home?

Beginning with the 2018 tax year, the business use of home deduction can be claimed within the Schedule C. The Business Use of Home form in the Itemized Deductions section of the program is for state use only and will not be carried to the itemized deductions section of the federal return.

To claim expenses for business use of the home, part of your home must be used regularly and exclusively as one of the following:

1. The principal place of business for your business or trade
2. The place where you meet and deal with your clients, customers, or patients during  the normal hours of your business or trade, or
3. In connection with your business or trade, if you use a separate structure that is not attached to your home,
4. On a regular basis for certain storage use
5. As a day care facility

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. For instance , 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. Further, 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.

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. For more information, click here.

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. For more information, please review Publication 587.