Small business tax help website
 

Business Use of Home Expenses

What is the tax deduction for the business use of home?

If you use a part of your home for business, even if it is not your full time job but a secondary one, you may be able to deduct the expenses for business use of your home from your business income.

 
What expenses can I include in the tax deductions for business use of home expenses?

If you qualify for this deduction, you can include as business expense a portion of your:

  • home mortgage interest, or
  • rent,
  • insurance,
  • maintenance,
  • real estate taxes, and
  • utilities.

If you itemized your deductions, you must reduce your total mortgage interest and real estate taxes on Schedule A by the amount claimed for the business use of your home.

 

Net income limitations for business use of home expenses deductions

You may also deduct, as a business expense, a portion of the depreciation of the home if you own it. Your business use of home deductions that would normally not be deductible to an individual (e.g. depreciation, insurance, utilities, etc.) cannot be greater than the net income of your business. Deductions that are normally deductible to an individual (e.g. mortgage interest and real estate taxes) are not subject to net income limitations.

 

When to use the Form 8829?

Form 8829, Expenses for Business Use of Your Home, is the form used o figure the deduction, which is then entered on line 30 of Schedule C. form 8829 is shown on the following page. For more information on the business use of your home, consult the IRS Publication 587, Business Use of Your Home.