Who qualifies for the home office tax deduction?

The home office tax deduction can let eligible taxpayers claim certain household expenses tied to using part of a home for business when they file taxes. Whether someone qualifies depends on several factors, including whether they are self-employed or work remotely, and whether the space is used regularly and exclusively for business.

Intuit TurboTax outlines the basic IRS rules to help people determine whether the deduction applies to them.

Remote employee or self-employed?

People who work from home as employees generally cannot claim a tax write-off for their workspace as a home office. Self-employed workers, however, may be able to benefit from the deduction.

Before the Tax Cuts and Jobs Act, remote employees could deduct unreimbursed employee business expenses, including a qualified home office. Those deductions were suspended for tax years 2018 through 2025, and later legislation permanently ended the deduction for unreimbursed employee business expenses.

As a result, employees who work remotely for an employer do not qualify for the home office tax deduction, unlike business owners who are self-employed or independent contractors receiving Form 1099.

What counts as a home office?

To qualify, the space must be the main place where you conduct business or a location where you regularly meet with clients, patients, or customers. The area must also be used exclusively for business. A home office may be any part of a house, apartment, mobile home, condominium, boat, or similar structure used regularly and only for business purposes.

An unattached structure on the property, such as a barn, studio, greenhouse, or garage, can also qualify. In that case, it does not have to be your primary business location or a place where you meet clients, but it still must be used regularly and exclusively for business.

In some cases, storage space or use of the home as a daycare facility can also meet the requirements.

The exclusive and regular use test

Exclusive use means the area is used only for business, all the time. Exceptions exist for storage of inventory or samples and for a home used as a daycare facility, but the regular-use requirement still applies in those situations.

The IRS has emphasized this standard with examples. A room used for full-time business but also used by children for homework would fail the exclusive-use test. Likewise, a room that serves both as an attorney’s workspace and as a family den would not qualify.

What counts as a business?

Eligibility also depends on the type of activity performed in the space and whether it is carried out regularly. The more substantial the work — in terms of time, effort, and income generated — the more likely it is to qualify.

Profit is not the only factor, but earning money from the activity is required. For example, using a living room exclusively to manage a personal investment portfolio does not qualify, because investing is not considered a business for this purpose. By contrast, someone using a home office exclusively to manage rental properties may qualify as a property manager rather than an investor.

What expenses can be deducted?

Business-use deductions for a home may include the business portion of:

• Real estate taxes
• Mortgage interest
• Rent
• Casualty losses
• Utilities
• Insurance
• Depreciation
• Maintenance
• Repairs

Generally, costs tied to parts of the home not used for business cannot be deducted. That includes things like lawn care or repairs made to a workout room.

How the deduction is calculated

Qualified taxpayers can choose between two methods to figure out the home office deduction.

Actual expense method

Under the actual expense method, a taxpayer calculates the real expenses associated with the home office. This method was required for tax years 2012 and earlier.

The deduction is based on the share of the home used exclusively for business. For instance, if a 200-square-foot room is used for business in a 2,000-square-foot home, then 10% of the home is devoted to business use.

In that example, 10% of eligible expenses such as mortgage interest, depreciation, and utilities could be deducted. If those total expenses were $4,500, the deduction would be about $450.

Here’s the basic formula:

% business use × total expenses = home office deduction

0.10 × $4,500 = $450

Simplified method

The simplified method reduces recordkeeping by allowing taxpayers to multiply a set rate by the allowable square footage of the office instead of calculating actual expenses.

Under this option, the rate is $5 per square foot of home used for business. The maximum amount is 300 square feet, which produces a maximum deduction of $1,500.

Using the same example of a 200-square-foot workspace, the simplified method would produce a $1,000 deduction.

That method does not always provide the larger deduction, though. The better option depends on the taxpayer’s actual expenses and which costs apply to the business area. Repairs to another part of the house, for example, cannot be included.

Other things to keep in mind

No matter which method is used, the deduction cannot exceed gross income limits tied to the business.

Taxpayers should also consider depreciation and keep detailed records, since eligibility can change from one year to the next.