Home Office Deductions for Small Business Owners

The home office deduction allows qualified taxpayers to deduct certain home expenses when they file taxes. To claim the home office deduction on your 2021 tax return, taxpayers generally must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business.

Can You Claim This Deduction?

  • Employees are not eligible to claim the home office deduction.
  • The home office deduction is available to both homeowners and renters.
  • There are certain expenses taxpayers can deduct. These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.
  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.
  • The term “home” for purposes of this deduction:  includes a house, apartment, condominium, mobile home, boat or similar property. It also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse. It does not include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
  • Expenses that relate to a separate structure not attached to the home may qualify for a home office deduction. They will qualify only if the structure is used exclusively and regularly for business.  
  • Generally, there are two basic requirements for the taxpayer’s home to qualify as a deduction: (1) Must be exclusive use of a portion of the home for conducting business on a regular basis, and (2) Must generally be the taxpayer’s principal place of business.