The gross income limitation for home office expenses is based on the income generated from the business conducted in the home office. Essentially, the deduction cannot exceed the gross income from the business use of your home. If your business has a net loss, you cannot claim the home office deduction for that year, but you may be able to carry forward unallowed expenses to future years if using the actual expense method.
If you do have some net income before the Home Office Expense is applied, you may be able to use some expense to bring your net come to zero. The remainder may be carried forward for unallowed expenses in a future year.
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