Landlord home office expense

[burgerguy14]

I have my home office in my multi-family rental building.   The home office is used only for rental business.

I think there are 2 ways to deduct such a home office:

1. Start a Schedule C with zero income and file Form 8829 (Expense for business use of your home)

2. Figure out home office expense and list as a "Home Office Expense" on  Schedule E Other Expenses section.

My home office expense according to Form 8829 is

            (Schedule A Mortgage Interest + RE Taxes)   x (Home office Square footage / Home Square footage)

I prefer option 2 b/c I don't have to add a pointless Schedule C.

How are you guys handling this?

[Carl]

Home office expenses for rental property are not allowed on SCH E, as long term residential rental property produces passive income.

For long term rental property to qualify as a SCH C business, there are specific criteria that must be met. For a short gist of those requirements, see IRS Publication 527 at https://www.irs.gov/pub/irs-pdf/p527.pdf on page 12, third column, "Schedule C (Form 1040), Profit or Loss From Business."

A majority of landlords who rent property out for the long term usually do not qualify as a SCH C business, as they do not meet the requirements as outlined in the referenced publication.

Take note that the requirements listed there are not all inclusive, and the things you can't count as "substantial services that benefit the tenant" are also not all inclusive. 
Only you can determine if you meet the requirements or not. Note that reporting long term rental property on SCH C may (or may not) have the potential to trigger an audit. It just depends on to many factors to cover here.

[Critter-3]

Another point ... you cannot deduct the OIH form 8829 on a Sch C with no income hense trying that will get you nowhere.

[AmeliesUncle]

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@burgerguy14 wrote:

2. Figure out home office expense and list as a "Home Office Expense" on  Schedule E Other Expenses section.

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That is the way to do it.  But you can only do that if the rental activity rises to the level of a "business".