The Exclusive Use Test must be met in order for you
to claim expenses for the Business Use of your Home!

Exclusive Use Requirement
To qualify for a home business deduction you must meet the
exclusive use test.  You must use a specific area of your home
only for your trade or business.  There are two exceptions to this
exclusive use rule for the storage of inventory and for daycare
facilities.
 

The area used for business can be a room or other separately
identifiable space.  The space doesn't have to be marked off by a
permanent partition.  You need to be sure that you do not mix
personal used items mixed with business unit items. 

Example 1:  If you perform tax services and use a room in your house
as an office, you wouldn't want to have a bookcase in your office
comprised of tax related literature mixed with romance novels.

The area must be used for business purposes ONLY. 

Example 2:  You may pay your bills once a month on your dining
room table, but you also eat breakfast and dinner on the table.  The
dining room table is not used "exclusively" for business purposes
due to your personal use and will not qualify  for the home office
deduction.

The area you use must be set up for doing business.  You will not
qualify for the exclusive definition if you, for example, have an office
and also use it to do investment work, play videogames on your
computer, or manage your finances.

Exclusive Use Exceptions
Note that there are two exceptions to the exclusive use test.  You
do not have to meet the exclusive use test if either of the following
applies:
 

Storage of Inventory or Product Samples
If you use part of your home for storage of inventory or product
samples, you can claim expenses for the business use of your home
without meeting the exclusive use test.  However, you must meet
all the following tests:
 

You sell products at wholesale or retail as your trade or business. You keep the inventory or product samples in your home for use in your trade or business. Your home is the only fixed location of your trade or business. You use the storage space on a regular basis. The space you use is a separately identifiable space suitable for storage.

Example:  Karl Moore's home is the only fixed location of his business
of selling mechanic's tools at retail.  He regularly uses half of his basement
for storage of inventory and product samples.  He sometimes uses the
area for personal purposes.  The expenses for the storage space are
deductible even though he does not use this part of his basement
exclusively for business.



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