Quick guide · 3 min read
Home office deduction
If part of your home is used regularly and only for your business, you can deduct part of your housing costs, and it can turn trips from home into deductible business miles.
- Who it fits
- Self-employed people with a space used only for business.
- Usually not a fit
- W-2 employees, who cannot deduct a home office for their day job.
- Figures
- 2026 tax year
The key rule
Regular and exclusive business use. It must be your principal place of business or a place where you meet clients.
How it works
Two tests must both be met:
- Regular and exclusive use. The space is used for business, and only for business, on a continuing basis. A desk in the corner of a guest room that family also use does not qualify; a separate room used only as an office does.
- Principal place of business. It is where you do your administrative and management work and you have no other fixed location for it, or where you regularly meet clients.
3 steps
Measure the space
Square footage of the office and of the whole home.
Choose a method
- Simplified: $5 per square foot, up to 300 square feet ($1,500).
- Regular: the office share of rent or mortgage interest, property tax, utilities, insurance, repairs and depreciation.
Keep the records
A floor plan, photos and the household bills.
Example
Simplified vs regular
Your 250-square-foot office is 12.5% of a 2,000-square-foot home. The simplified method gives $1,250. Under the regular method, 12.5% of $48,000 of rent, utilities and insurance is $6,000. The regular method wins, with a little more record-keeping.
Common mistakes
- S corp owners should use an accountable plan instead.
- Depreciation claimed on a home office is recaptured when you sell the home.
- Using the office for personal things, such as a guest bed or a family computer.
Questions we hear
Can a renter take the deduction?
Yes. Renters deduct the office share of rent instead of mortgage interest and depreciation.
Does it work if I also have an office elsewhere?
Only if your home office is where you do your administrative work and you have no other fixed location for it, or where you meet clients.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.