Tax Deductions For Home Office- Renters

Tax Deductions For Home Office

Q: Does the home office deduction work if you rent your home?

A: Yes it does!  The home office deduction is probably the most misunderstood deduction in the entire tax code. For years, taxpayers feared that claiming tax deductions for home office would raise an automatic audit flag. But Congress has relaxed the rules, so now it’s far less likely to attract attention.

Qualifying for tax deductions for home office is fairly simple, here’s how:

You must use your office regularly and exclusively for business to qualify for the deduction.  Once you’ve qualified, you can start deducting expenses. If you’re taxed as a proprietor, you’ll use Form 8829. If you’re taxed as a partnership or corporation, there’s no separate form, which helps you “fly under the radar.”

First, you’ll need to determine business use percentage of your home. You can divide by the number of rooms if they’re roughly equal, or calculate the exact percentage of square footage. You can exclude common areas like halls and stairs to boost that business use percentage.

Next, you’ll deduct your business use percentage of mortgage interest, and property taxes, or even your rent if you don’t own your home.

Finally, you’ll deduct your business use percentage of utilities, repairs, insurance, garbage pickup, and security. If business use percentage for specific expenses differs from business use percentage for the overall home – such as high electric bills for home office equipment – you can claim the difference as “direct” expenses.”

More Answers About Tax Deductions For Home Office . . .

Absolutely! I am assuming you already figured out you would qualify for the home office deduction otherwise (as in you have a space in your home that you use regularly and exclusively for business).

The only difference in tax deductions for home office use for a renter vs. a home owner is the type of expenses you get to deduct. A homeowner would write off a percentage of their mortgage interest, property taxes, and homeowner’s insurance using this strategy. As a renter, you would be allowed to write off a percentage of your rent and renter’s insurance. Of course, if you pay your utilities separate from your rent you still get to deduct a percentage of those as well. Here are a few more home office deductions. Answered by Eric Levenhagen, CPA CTC


Still have questions about tax deductions for home office? Talk with a Certified Tax Coach today!



**The answers provided to submitted questions are intended to serve solely as discussion on various tax topics, with the understanding that the publisher and the expert/author are not engaged in rendering legal, accounting, or other professional service and that they are not offering such advice in their responses. They do not constitute legal advice nor are they a substitute for legal counsel. All questions may not be answered.

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