Friday, August 20, 2010

How much of a home(rent or mortgage) is tax deductable if you work from your home?

i want to work from from home/apt., but want to know what or how much is the rent going to be deductible.How much of a home(rent or mortgage) is tax deductable if you work from your home?
You should have a part of your home exclusively for business use. For that part, you can deduct rent and utilities as itemized deduction.How much of a home(rent or mortgage) is tax deductable if you work from your home?
Maybe none. An area must be used regularly and exclusively for your business to be deductible. You calculate the space that's your ';home office'; compared to the total space in your home to get the % you can deduct. That's if it's your own business. If you are an employee, there are a number of additional rules besides the regular and exclusive use to be able to take a deduction.
You take the percentage of space that you use for your home office and that is the percentage of home, electric, and telephone that you can deduct. If your house is 2000 square feet and your office is 8 x 10 which would be 80 suare feet then you could deduct 25%. 2000 square feet divided by 80 square feet is 25 percent.
I was told by one accountant to use the room count, e.g. 7 rooms, 1 of which is the dedicated office space. So 1/7th of all the total amount. . Another one told me to use square footage. Do check with your accountant for specifics.
The IRS rules are very strict. Can only be used for business, no personal use at all, i.e. kids or spouse using computer; you can't have another place to conduct business, so you can't be a telecommuter and claim office expense.



No comments:

Post a Comment