Home Office (Regular Method)
Deduct actual expenses: rent, utilities, insurance, repairs based on office square footage.
Tax Form
Form 8829, Schedule C Line 30
Estimated Savings
$1,500-10,000/year
IRS Reference
Publication 587
Income Level
How It Works
The regular method allows you to deduct actual home expenses based on the percentage of your home used for business. You calculate the business percentage by dividing your office square footage by total home square footage. Deductible expenses include rent or mortgage interest, property taxes, utilities, insurance, repairs, and depreciation.
IRS Rules & Requirements
- Space must be used regularly and exclusively for business
- Calculate business % = office sq ft ÷ total home sq ft
- Deduct that percentage of: rent/mortgage interest, utilities, insurance, repairs
- Can also deduct depreciation on the business portion of your home
- Deduction cannot exceed gross income from the business (carryforward allowed)
Real Examples
200 sq ft office in 2,000 sq ft home = 10% of home expenses deductible
If rent is $2,000/month, 10% = $200/month or $2,400/year deduction
Plus 10% of utilities ($150/month) = $180/year additional deduction
Common Mistakes to Avoid
- Using space that isn't exclusively for business (guest room)
- Not calculating square footage accurately
- Forgetting to include all eligible expenses (insurance, repairs)
- Not filing Form 8829 when required
Pro Tip
The regular method typically saves more than the simplified method if your home office is large or your housing costs are high. Compare both methods each year.
Related Deductions
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