Who qualifies
You must use a specific area of your home regularly and exclusively for business. A dedicated room or clearly defined space helps.
Methods: simplified vs. regular
- Simplified: Standard rate per square foot up to a cap.
- Regular: Actual expenses allocated by business‑use percentage (mortgage interest/rent, utilities, insurance, repairs).
Tip: The regular method can yield larger deductions when costs are high; simplified is easier and avoids depreciation recapture.
Allocation & mixed expenses
Direct expenses (painting the office) are 100% deductible; indirect expenses (utilities) are allocated by business‑use percentage.
Documentation
- Floor plan with square‑footage calculation.
- Bills/receipts for utilities, rent, insurance.
- Photos show exclusive business use if ever questioned.