Who qualifies
A home can be a house, apartment, condo, mobile home or boat. According to IRS Publication 587, a space qualifies only if it passes two tests.
- Regular and exclusive use. You use a specific area only for your trade or business, on a regular basis. A guest-room corner counts only if it is never used for anything else.
- Principal place of business, or a place to meet clients. The space is your main place of business, or you meet clients or customers there in the normal course of business. Administrative or management work counts when you have no other fixed location for that work. A detached structure, like a studio, only needs the first test.
Two exceptions relax the exclusive use rule: storage of inventory or product samples when your home is the only fixed location of a business that sells products, and a licensed daycare facility.
Self-employed
Sole proprietors, freelancers, independent contractors and single-member LLC owners who file Schedule C can claim the deduction when the space passes the tests above. The regular method is figured on Form 8829; the simplified method uses a worksheet in the Schedule C instructions.
W-2 employees
Generally not eligible. The Tax Cuts and Jobs Act suspended the deduction for unreimbursed employee expenses for 2018 through 2025, and section 70110 of Public Law 119-21 (2025) made that suspension permanent (26 U.S.C. 67(h)). Armed Forces reservists, qualified performing artists and a few other groups follow separate Form 2106 rules.
An employee who also runs a side business from home can claim an office that passes both tests for that business.
The simplified method
The IRS introduced the simplified option in 2013 (Revenue Procedure 2013-13). You multiply the square footage of the office by a prescribed rate of $5 per square foot, for up to 300 square feet. The largest possible deduction is therefore $1,500 a year.
- You claim no depreciation for the years you use it, which keeps the later sale of the home simpler.
- If you itemize, your full mortgage interest and real estate taxes stay on Schedule A, within its usual limits.
- The deduction cannot exceed the gross income from the business use of the home minus your other business expenses. Any excess is lost; there is no carryover.
The regular method
The regular method deducts actual costs. Your business-use percentage is the office area divided by the home area: 200 square feet of 2,000 is 10%. Expenses fall into three groups.
- Direct expenses are only for the office, such as painting it. You deduct them in full.
- Indirect expenses are for the whole home: rent, deductible mortgage interest, real estate taxes, homeowners or renters insurance, utilities, general repairs and a security system. You deduct the business-use percentage.
- Unrelated expenses are only for other parts of the home. You deduct none of them.
Owners also depreciate the business part of the building, not the land, as nonresidential real property over 39 years. Deductions above the income limit carry forward to the next year. The trade-off is record keeping and depreciation recapture when you sell.
| Simplified method | Regular method | |
|---|---|---|
| How it is figured | $5 × office sq ft (max 300 sq ft) | Business-use % of actual home expenses, plus direct expenses and depreciation |
| Maximum | $1,500 | No fixed cap; limited by business income |
| Depreciation | None | Business part of the building over 39 years |
| Carryover of excess | No | Yes |
| Form (Schedule C filers) | Worksheet in the Schedule C instructions | Form 8829 |
Home office deduction calculator
Enter annual amounts for the whole home. Leave a field blank if it does not apply.
Method: simplified = $5 × office sq ft, max 300 (IRS Publication 587). Regular = business-use % × home expenses + direct expenses + a full year of depreciation (basis × % ÷ 39); the first year is smaller. Educational estimate, not tax advice. Nothing you type leaves your browser.
Common questions
Can I switch between the simplified and regular method?
Yes. IRS Publication 587 lets you choose either method for any tax year. A regular-method carryover from an earlier year cannot be used in a year you choose the simplified method.
Do renters qualify?
Yes. Under the regular method, rent is an indirect expense, so you deduct the business-use percentage of it. Renters have no depreciation to claim.
What happens when I sell a home I used for an office?
Depreciation you claimed, or could have claimed, after May 6, 1997 cannot be excluded from gain when you sell. The simplified method claims no depreciation for the years you use it.
Sources: IRS Publication 587, Business Use of Your Home; the Instructions for Form 8829 and for Schedule C (Form 1040); Revenue Procedure 2013-13; IRS.gov home office deduction guidance. Rules change; check the current edition of Publication 587 before you file.