Home office deduction

The home office deduction is an income tax deduction that an individual can take for maintaining an office in his or her residence. In order to take the deduction, the taxpayer must meet the following requirements:

  • The space must be exclusively set aside for business use, and is regularly used in that capacity
  • If the individual is an employee, the space must be maintained for the convenience of his or her employer

The expenses that can be deducted are as follows:

  • Depreciation
  • Insurance
  • Mortgage interest
  • Repairs
  • Utilities

The amount of the deduction claimed should be calculated as the home office's percentage of the entire house that has been set aside for conducting business. The home office can also be a separate free-standing structure, in which case the expenses deducted can be associated with that structure.