To deduct expenses related to the business use of part of your
home, you must meet specific requirements. Even then, your deduction
may be limited.
To qualify to claim expenses for business use of your home, you
must meet the following tests.
- Your use of the business part of your home must be:
- Exclusive (however, see Exceptions to exclusive use,
- For your business, AND
- The business part of your home must be one of the
- Your principal place of business,
- A place where you meet or deal with patients, clients, or
customers in the normal course of your business, or
- A separate structure (not attached to your home) you use in
connection with your business.
To qualify under the exclusive use test, you must use a specific
area of your home only for your business. The area used for
business can be a room or other separately identifiable space. The
space does not need to be marked off by a permanent partition.
You do not meet the requirements of the exclusive use
test if you use the area in question both for business and for
You are an attorney and use a den in your home to write legal
briefs and prepare clients' tax returns. Your family also uses the den
for recreation. Since the den is not used exclusively in your
profession, you cannot claim a business deduction for its
Exceptions to exclusive use.
You do not have to meet the exclusive use test if you use part of
your home in either of the following ways.
- For the storage of inventory or product samples.
- As a day-care facility.
For an explanation of these exceptions, see Publication 587,
Business Use of Your Home (Including Use by Day-Care Providers).
To qualify under the regular use test, you must use a specific area
of your home for business on a continuing basis. You do not meet the
test if your business use of the area is only occasional or
incidental, even if you do not use that area for any other purpose.
Principal place of business.
You can have more than one business location, including your home,
for a single business. To qualify to deduct the expenses for the
business use of your home under the principal place of business test,
your home must be your principal place of business for that business.
To determine your principal place of business, you must consider all
the facts and circumstances.
Your home office will qualify as your principal place of business
for deducting expenses for its use if you meet the following
- You use it exclusively and regularly for administrative or
management activities of your business.
- You have no other fixed location where you conduct
substantial administrative or management activities of your
Alternatively, if you do business at more than one location, and
your home office does not qualify as your principal place of business
based on the previous rules, you determine your principal place of
business based on the following factors.
- The relative importance of the activities performed at each
- If the relative importance factor does not determine your
principal place of business, you can also consider the time spent at
If, after considering your business locations, your home cannot be
identified as your principal place of business, you cannot deduct home
office expenses. However, for other ways to qualify to deduct home
office expenses, see Publication 587.
If your gross income from the business use of your home equals or
exceeds your total business expenses (including depreciation), you can
deduct all your business expenses. If your gross income from that use
is less than your total business expenses, your deduction for certain
expenses for the business use of your home is limited.
Your deduction of otherwise nondeductible expenses, such as
insurance, utilities, and depreciation (with depreciation taken last),
allocable to the business is limited to the gross income from the
business use of your home minus the sum of the following.
- The business part of expenses you could deduct even if you
did not use your home for business (such as mortgage interest, real
estate taxes, and casualty and theft losses).
- The business expenses that relate to the business activity
in the home (for example, salaries or supplies), but not to the use of
the home itself.
Do not include in (2) above your deduction for half of your
Use Form 8829, Expenses for Business Use of Your
Home, to figure your deduction.
For more information on deducting expenses for the business use of
your home, see Publication 587.
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