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
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