Renting a room for a business

[donbons]

I rent a room in a house as my domicile, but I also rent a separate room in this house solely for my business and pay a separate fee for the room. Can I deduct this as a business expense (office rent)? Or do I have to use the Home office formula to deduct it since both my Room and the Business office are located in the same structure (a Home)? 

The room contains ONLY items related to my business such as 3D printers, along with other tools, furniture and hardware related to the business.  Not sure if this matters but the room is separated from mine by another bedroom that is not occupied by me. 

[DianeW777]

Yes, you can deduct the rent as office space. If you have shared utilities or other shared expenses you can prorate them by the office square feet to total square fee. This must be your sole place of business to store supplies needed only for business if there is not a separate entrance or office space.  Review the information here and in the link below to evaluate your specific situation.

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 day care and storage facilities.

There is an option to use a straight rate per square feet without having to keep all the expense receipts.  

Simplified square footage method

Beginning with 2013 tax returns, the IRS began offering a simplified option for claiming the deduction. This new method uses a prescribed rate multiplied by the allowable square footage used in the home.

• For 2021, the prescribed rate is $5 per square foot with a maximum of 300 square feet.
• If the office measures 150 square feet, for example, then the deduction would be $750 (150 x $5).
• The space must still be dedicated to business activities.

With either method, the qualification for the home office deduction is determined each year. Your eligibility may change from one year to the next. Finally, please note that only certain expenses such as rent, mortgage interest and property taxes qualify for the deduction, and the deduction is limited to $10,000.

For more information about the home office deduction click this link: Home Office Deduction

[LudwigVan_fan]

Based on your statements, 1.  You are renting a bedroom in a house and allowed use of some other space.  2.  You pay separate rent (fee) for use of a room that is used 100% for business.  3.  You do not own the house.

Is the house owned by a relative or a 3rd party?  Rent is FMV (fair market value)? 

Is the type of business such that you don't meet clients or 3rd parties?   Online type of business?

If the answer to these questions are 3rd party and FMV rent;  I would say you could deduct the rent of the room used 100% for business.  I don't think you would have any other expenses such as electricity, etc., just the rent.  However, if you pay a separate fee for utilities, then that would be deductible, based on either sq. footage, or if the fee is directly for the utilities of the office space.

I don't see this as being any different than renting space in say an office building; except there is no entrance for public unless invited in.  That might make it a "Home office".  But, you are paying a separate fee, so there would be no allocation based on sq. feet as you are paying directly for the footage.

If the scenario is any different than what I based my opinion, that may/may not change the answer.

This may help you and/or provide links for further reading/research

https://www.irs.gov/publications/p535