What is the home office deduction?

The home office deduction allows self-employed individuals to deduct expenses related to the portion of their home used exclusively and regularly for business. This includes a proportional share of rent/mortgage interest, utilities, insurance, and repairs — or a simplified flat rate of $5 per square foot (up to 300 sq ft).

What is the difference between the regular and simplified home office deduction methods?

The regular method calculates your actual home office expenses based on the percentage of your home used for business. The simplified method uses $5 per square foot (max 300 sq ft = $1,500 deduction). The regular method typically yields a larger deduction but requires more recordkeeping.

Can I take the home office deduction if I rent?

Yes. Renters can deduct the proportional share of rent attributable to the home office space. If your home office is 200 sq ft in a 1,000 sq ft apartment, 20% of your rent is deductible as a business expense.

Does the home office deduction increase audit risk?

The IRS has historically flagged home office deductions, but the risk is overstated. As long as you meet the 'exclusive and regular use' requirement and keep documentation (photos, measurements, receipts), the deduction is legitimate. The simplified method reduces audit complexity.

Home Office Deduction: Regular vs. Simplified Method

# Home Office Deduction: Regular Method vs. Simplified — The Math That Determines Which One Wins The home office deduction has two calculation methods: the simplified method ($5 per square foot, max $1,500) and the regular method (actual percentage of home expenses). The regular method almost always produces a larger deduction — sometimes 3–5x larger — but creates a depreciation recapture issue when you sell your home. The simplified method is not always the safe choice. The regular method produces a 3–5x larger deduction in most cases — but comes with a depreciation recapture trap when you sell your home. The exact calculation, the documentation requirements, and the decision framework. Read the full article at https://solofilinglab.com/articles/home-office-deduction-regular-vs-simplified-method-math