How Much of a Home Office Is Tax Deductible?

Generally, you must use a specific part of your home regularly and exclusively for business, and it must be your principal place of business or a place where you regularly meet clients or customers. A desk used for work and personal activities usually does not meet the exclusive-use requirement, although special rules apply to certain storage spaces, daycare facilities, and separate structures.

With the regular method, you calculate the business-use percentage by dividing your office’s square footage by your home’s total square footage; for example, a 150-square-foot office in a 1,500-square-foot home represents 10% business use. You can generally apply that percentage to eligible shared expenses, such as rent, utilities, insurance, and certain repairs, while expenses solely for the office may be fully deductible if they otherwise qualify.

The simplified method is easier to calculate, while the regular method may produce a larger deduction when eligible expenses are high, but it requires more detailed records and may involve depreciation and tax consequences when you sell your home. Both methods are subject to income limits, and the regular method may allow certain unused expenses to carry forward; our team recommends comparing both calculations with a tax professional before filing.

Check the product’s listed specifications when evaluating which method should you choose.

Keep measurements, receipts, and records showing how you use the space, and remember that a deduction reduces taxable income rather than reimbursing you for the full amount deducted. As you organize your workspace, our home office setup guide and our Your Ultimate Home Office Guide digital download can help you plan your space.