Deductible Expenses
Certain expenses are deductible whether or not you use
your home for business.  If you qualify to claim business
use of home expenses, use the business percentage of
these expenses to figure your total business use of the home
deduction.  These expenses include the following:

Other expenses are deductible only if you use your home for
business.  You can use the business percentage of these expenses
to figure your total business use of home deduction.  These
expenses generally include (but are not limited to) the
following:

Real Estate Taxes
We have already given you an overview of what real estate
taxes are (in case you have forgotten click the link).  To figure the
business part of your real estate taxes, multiply the real estate taxes
paid by the percentage of your home used for business. 

Deductible Mortgage Interest
Like real estate taxes, we have given you an overview of what mortgage
interest is.  To figure the business part of your deductible mortgage interest,
multiply this interest by the percentage of your home used for business. 
You can include interest on a second mortgage in this computation.  If your
total mortgage debt is more than $1,000,000 or your home equity debt is
more than $100,000 your deduction may be limited.

Casualty Losses
If you have a casualty loss on your home that you use for business, treat
the casualty loss as a direct expense, an indirect expense, or an unrelated
expense, depending on the property affected.

Insurance
You can deduct the cost of insurance that covers the business part of your home.
However, if your insurance premium gives you coverage for a period that
extends past the end of your tax year, you can deduct only the business percentage
of the part of the premium that gives you coverage for the tax year.  You can
deduct the business percentage of the part that applies to the following year in
that year.

Rent
If you rent the home you occupy and meet the requirements for business use of the
home, you can deduct part of the rent you pay.  To figure the deduction, multiply your
rent payments by the percentage of your home used for business. 

If you own your home, you cannot deduct the fair rental value of your home.

Repairs
The cost of repairs that relate to your business, including labor (other than
your own labor), is a deductible expense.  For example, a furnace repair benefits
the entire home.  If you use 10% of your home for business, you can deduct 10%
of the cost of the furnace repair. 

Repairs keep your home in good working order over its useful life.  Examples of
common repairs are patching walls and floors, painting, wallpapering, repairing
roofs and gutters, and mending leaks.  However repairs are sometimes treated as
permanent improvements.

Security System
If you install a security system that protects all the doors and windows in your home,
you can deduct the business part of the expenses you incur to maintain and monitor
the system.  You also can take a depreciation deduction for the part of the cost of the
security system relating to the business use of your home. 

Utilities and Services
Expenses for utilities and services, such as electricity, gas, trash removal, and
cleaning services, are primarily personal expenses.  However, if you use part of
your home for business, you can deduct the business part of these expenses.  Generally,
the business percentage for utilities is the same as the percentage of your home
used for business.

Telephone
The basic local telephone service charge, including taxes, for the first telephone
line into your home is a nondeductible personal expense.  However, charges for
long distance phone calls on that line, as well as the cost of a second line into your
home used exclusively for business, are deductible business expenses.  Do not
include these expenses as a cost of using your home for business.  Deduct these
charges separately on the appropriate for or schedule. 

Depreciation
If you own your home and qualify to deduct expenses for it's business use, you can
claim a deduction for depreciation.  Depreciation is an allowance for the wear and
tear on the part of your home used for business. 

To learn more about Home Office Depreciation, click here.

Non-Deductible Expenses
Household expenses and repairs that do not benefit the office space
are not deductible.  However, a pro rata share of the cost of painting the
outside of a house or repairing a roof is deductible.  Costs of lawn care
and landscaping are not deductible.

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