Home Office Expense... Recently Married... am I renting from my spouse? Or am I paying some mortgage?

[rrf0021]

I've been self-employed for many years and I do most of my work from home.  In years past I owned a condo, and calculating the "Expenses for Business Use of Your Home" was always really straightforward.  

But then I moved in with my fiance, sold my condo, and we got married several months later.  I now live and work from his home and I contribute towards the housing payment.  And since the home is not "mine" (is it?) I'm not sure how to characterize my home expenses.

I give him money for half the housing costs.  Let's say the housing payment is $2,000 each month (which includes mortgage, interest, property taxes, insurance, and HOA fee).  So I pay $1,000 each month.  I send this money directly to my husband's checking account, and he pays the bills out of his account. He owned this home before me, so the mortgage is in his name only, and the house is also in his name only.  We file our taxes separately.  I don't get any kind of Form 1098 from the bank since the loan isn't in my name.

So, can I simply classify the $12,000 I paid this year as 'rent' when I'm figuring my Home Office expenses?  I think it was definitely rent for the few months before we were married, right?  What about after we became married?  Can I still 'rent' half of the home?  Or do I need to take some of his mortgage interest deduction, some of his property tax deduction, etc (and I suppose he has to subtract my portion from his deductions, even though the 1098 is fully in his name)?

-Rebecca

[AlanT222]

No, you cannot claim the $12000 as a home office expense.  

Your home office business deductions are based on either the percentage of your home used for the business or a simplified square footage calculation.

Generally speaking, to qualify for the home office deduction, you must meet one of these criteria:

• Exclusive and regular use: You must use a portion of your house, apartment, condominium, mobile home, boat, or similar structure for your business on a regular basis. This also includes structures on your property, such as an unattached studio, barn, greenhouse, or garage. It doesn't include any part of a taxpayer's property used exclusively as a hotel, motel, inn, or similar business.
• Principal place of business: Your home office must be either the principal location of your business or a place where you regularly meet with customers or clients. Some exceptions to this rule include daycare and storage facilities.

Please click here for detailed instructions on how to calculate the home office expense deduction.  

[rrf0021]

You completely misunderstood my question.

I was not asking if the $12,000 is a business expense.

I understand how to pro-rate the cost of rent or mortgage.

My home home office is where I run my business.  It is the primary place of business.

My home office is 300 square feet.  It is a room dedicated to my business.   It is 20% of my home.

Therefore, only 20% of the the $12,000 is a business expense.

What I was asking is whether I am paying my spouse RENT, or whether I am paying part of the MORTGAGE.  As I am sure you are aware, there is a different way of calcuating home office expenses in a rented home vs a home that one owns.

[ColeenD3 · Accepted solution]

Yes. It can be considered rent if that is how both you and your husband are treating your arrangement.  It is more likely as Alan suggested however, that this is your home since you are married, regardless of who owned it first. 

[mpt15]

Similar for this deduction for home office expense, is there a difference between rent payment and mortgage payment? Is it classified the same for the deductions?

[AnnetteB6]

With regard to claiming either rent costs or mortgage interest for a qualified home office, the major difference is that when you own your home you will be expected to also claim depreciation on the qualified home office unless you use the simplified method for home office expenses.  

If you are renting your home, then the portion of the rent attributed to the office in the home is just a straightforward calculation based on the square feet of the office.  There is no depreciation to consider when you are renting.

@mpt15