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If you use part of your home regularly and exclusively for your business, the IRS gives you two ways to figure the deduction. Sources: the IRS simplified option page and Publication 587 (checked Oct 31, 2026).
$5 per square foot of the area used for business, up to 300 square feet, so at most $1,500. No depreciation, and fewer records. Mortgage interest and real estate taxes stay on Schedule A if you itemize. Like the regular method, it's capped at the gross income from the business use of the home minus other business expenses, and any excess can't be carried over.
Work out your business percentage, usually office area ÷ home area. Pub. 587's example is a 240 sq ft office in a 1,200 sq ft home, which is 20%. Indirect expenses for the whole home (rent, utilities, insurance, general repairs) are deductible at that percentage. Direct expenses for the office only count in full. Owners can also depreciate the business part of the home, which is recaptured on sale. Schedule C filers use Form 8829.
200 sq ft office in a 1,000 sq ft rented home (20%), $18,000 rent, $2,400 utilities, $300 insurance:
Renters with a larger share of the home often come out ahead with actual expenses. A small office in a low-cost home may favor the simplified method because of its simpler records.
Office sq ft in B1, home sq ft in B2, indirect expenses in B4:B10:
=MIN(B1,300)*5
=ROUND(B1/B2*SUM(B4:B10),2)
You choose the method each year on a timely filed original return, and you can't change it for that year afterward.
$5 per square foot of the area used for business, up to 300 square feet, so at most $1,500.
Multiply indirect home expenses such as rent, utilities and insurance by your business percentage (usually office area ÷ home area), add direct office expenses, and owners can depreciate the business part. Schedule C filers use Form 8829.
You choose the method each year on a timely filed original return, and you can't change it for that year afterward.
Skip the formulas: the free Home Office Deduction Calculator does this in your browser. Nothing is uploaded.
Just starting out? Grab the free Starter Expense Tracker (pay what you want, $0 is fine).