Should I allocate my "home office" square footage as a percentage of my living quarters only, or based on the entire square footage of the whole building?

[jkrijnen]

My husband's retail bakery business occupies the street level, and we have 2 stories of living quarters above. We sometimes have employees and/or interns who live with us. Am I supposed to be allocating my "home office" square footage as a percentage of the living quarters only, or based on the entire square footage of the whole building, which includes the business? The bakery has a separate entrance and separate utilities.

[jkrijnen]

When we purchased the building, we had to list the building's basis and improvements for depreciation, so I've always calculated "home office" square footage based on the bakery space + space in our living quarters used for housing staff and storing paper goods, etc.

[RichardK]

Generally if you have Commercial (business) space and residential (living) space, your office percentage will be the square footage of the home office divided by the residential (living)  square footage.