Home Office Deduction Calculator

Common Questions

• What qualifies as a home office for tax purposes?

  A space in your home that you use regularly and exclusively for business. It must be your principal place of business, or a place where you regularly meet clients or customers. A desk in a room that also serves as a guest bedroom generally doesn't qualify because it isn't used exclusively for business. 

• What is the simplified home office deduction method?

  The simplified method, created by IRS Revenue Procedure 2013-13, lets you deduct $5 per square foot of your home office, up to a maximum of 300 square feet, a cap of $1,500 per year. It requires no expense records, just the square footage of the space.

• What is the actual expense method for the home office deduction?

  The actual expense method deducts the business-use percentage of your real home costs: mortgage interest or rent, utilities, insurance, repairs, and depreciation (for homeowners). Business-use percentage is office square footage divided by total home square footage. It requires more recordkeeping but often produces a larger deduction than the simplified method, especially in higher-cost homes.

• Can renters take the home office deduction?

  Yes. Renters can use either method. Under the actual expense method, rent paid takes the place of mortgage interest and property tax in the calculation, prorated by business-use percentage.

• Can I switch between the simplified and actual expense methods each year?

  Yes. You can choose whichever method benefits you most each tax year. The choice isn't binding for future years. Many business owners recalculate both methods annually since expenses and square footage can change.

• Does the home office deduction trigger depreciation recapture when I sell my home?

  If you use the actual expense method and claim depreciation as a homeowner, that depreciation is generally recaptured (taxed) when you sell the home, regardless of whether you use the home sale exclusion. The simplified method avoids this issue because it doesn't involve a separate depreciation deduction.