If I am a consultant who works at home, but has projects for only a few months of the year, can I deduct home office expenses for the entire year in schedule C?

[Coleen3 · Accepted solution]

The rules for home office state:

Requirements to Claim the Home Office Deduction

Regardless of the method chosen, there are two basic requirements for your home to qualify as a deduction:

1. Regular and exclusive use.
2. Principal place of your business.

Regular and Exclusive Use.

You must regularly use part of your home exclusively for conducting business. For example, if you use an extra room to run your business, you can take a home office deduction for that extra room.

Regular Use

To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use. You must consider all facts and circumstances in determining whether your use is on a regular basis.

Trade or Business Use

To qualify under the trade-or-business-use test, you must use part of your home in connection with a trade or business. If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use.

Example.

You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. You do not make investments as a broker or dealer. So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home.

[SF2]

Thank you. This was very helpful. The regular use part is a little subjective, because I am available for work, and the office is dedicated for this job, but there are not enought projects to work on, so I end up using the office for only 2-3 months in the year.

[Coleen3]

It is subjective. Sometimes, that's just how it is. You have to evaluate to see if it is worthwhile. Also, you will have to depreciate the business percentage of the house and recapture it.

[SF2]

Yes, thanks for adding the depreciation/recapture complication.