Some expenses are deductible whether or not you use your home for business. Others are deductible only if the home is used for business.
Deductible Regardless
Real estate taxes.*
Mortgage interest.*
Casualty losses.*
Qualified mortgage insurance premiums, if available.
Deductible Only If for Business**
Homeowner’s insurance.
Rent.
Repairs and maintenance.
Security system.
Utilities and services.
Depreciation (deductible after applying deduction limitation to above expenses).
* Deductible as an itemized deduction, subject to limitation.
** Deductible as a business expense pro-rated for the amount of the business use of the home
Direct Expenses
Expenses that benefit only the area exclusively used for business, such as painting or repairs in the home office, are direct expenses that are fully deductible.
Indirect Expenses
Expenses for keeping up and running the entire home, such as insurance, utilities, and general repairs, are indirect expenses that are deductible based on the percentage of the home used for business.
Unrelated Expenses
Expenses for the part of the home not used for business, such as lawn care or painting a room not used for business, are unrelated expenses that are not deductible.
Telephone
The basic local telephone service for the first telephone line is nondeductible even if it is used for business. Any additional charges for long distance or a second line into the home used for business are deductible. Any deductible telephone costs are not included as business use of home cost.
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