What Is the Home Office Deduction?

The home office deduction allows self-employed individuals to deduct a proportional share of home expenses — including rent or mortgage interest, utilities, repairs, and insurance — for the portion of their home used regularly and exclusively for business. To qualify, the space must be your principal place of business or a place where you regularly meet clients, and it must be used exclusively for business — a desk in the corner of a room that doubles as a guest bedroom doesn't qualify. You can calculate the deduction using either the simplified method ($5 per square foot, up to 300 square feet) or the regular method (percentage of actual home expenses based on the office's share of total square footage). W-2 employees working from home cannot claim this deduction under current tax law, even if their employer requires remote work. The deduction is calculated on Form 8829 and can include a portion of depreciation on a home you own, though that creates depreciation recapture to consider when you eventually sell.