Home Office Deduction Calculator
Work out your home office deduction under both IRS methods and see which one leaves you better off this year. The simplified method is a flat rate per square foot; the regular method uses your actual home costs, including depreciation.
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What this calculator does and does not do
Educational, not tax advice. Figures are estimates. Eligibility rules are summarized, not exhaustive. US federal only; state treatment is not covered. Annual figures. Square-footage allocation only. No tax-savings, marginal-rate, bracket or self-employment tax figure is produced anywhere on this page.
The regular-method computation follows Form 8829 and its instructions, which govern for Schedule C filers. Publication 587’s narrative computes the depreciable basis differently, from land-excluded figures. Where the two differ, this page implements Form 8829.
What the number means
A deduction, not a refund. It reduces the business profit you are taxed on. The allowable figure is what you can take this year after the income limit; anything above it either carries forward or is lost, depending on the method.
Why it matters
For a Schedule C filer this reduces net profit, which reduces income tax and self-employment tax both. This page does not compute that effect; the linked tax calculators do.
What affects it
Office size relative to the home, what the home costs to run, whether you own or rent, whether you itemize, your tentative profit, and, if you own, the historical basis and value of the property.
What to do next
If the regular method wins by enough to justify the recordkeeping, keep the records and read the depreciation note before electing it. Then take the figure to the Quarterly Estimated Tax Calculator to see the effect on your next payment.
How the home office deduction works
Who can claim the home office deduction
If you are self-employed and part of your home is your workplace, you can deduct part of what that home costs you to run. Two rules decide whether you qualify, and both have to be true.
Exclusive use. The space has to be used only for business. Not mostly. Only. A spare room you work in and the family also watches television in does not qualify. The space does not need a wall around it, but it does need to be a clearly identifiable area that nothing else happens in.
Regular use. You have to use it consistently, not now and then. Incidental or occasional business use is not regular use.
Then one of these has to be true as well: your home is your principal place of business, or you meet patients, clients or customers there in the normal course of business, or the space is a separate free-standing structure like a studio, workshop or garage that you use for the business.
Your home can still be your principal place of business even if most of your actual work happens elsewhere. If you use the space exclusively and regularly for the administrative or management side of the business, the billing, the books, the ordering, the scheduling, and you have no other fixed location where you do substantial work of that kind, the home office qualifies.
You cannot claim a home office deduction as an employee. Working from home full time does not change that, and neither does choosing the simplified method. The deduction is for self-employed people. This calculator will tell you the same thing and stop, rather than give you a number you cannot use.
The simplified method
The simplified method is a flat rate. You measure the space and multiply.
Multiply the square footage of your home office by $5. The most you can count is 300 square feet, so the largest deduction the simplified method can produce is $1,500. If your office is 400 square feet you still count 300, and the extra 100 square feet does nothing. The calculator says so rather than quietly capping the number.
What you give up. Under the simplified method you claim no depreciation on the business part of your home. The IRS treats the depreciation allowable for that portion as zero for any year you use the simplified method. You also cannot carry forward an amount the income limit disallowed this year, and you cannot use a carryover from an earlier actual-expense year while you are using the simplified method. That earlier carryover waits for the next year you use actual expenses.
What you get. Much less recordkeeping. You do not allocate or substantiate actual expenses, you do not need basis or fair-market-value figures, you do not file Form 8829, and there is no depreciation on the business part of your home to account for when you eventually sell. You still have to be able to show that the space qualifies and that your square footage is what you say it is.
The regular method
The regular method uses what your home actually costs you.
First, work out what share of your home the office is. Divide the office square footage by the total square footage of the home. A 200 square foot office in a 2,000 square foot home is 10 percent. That percentage is what everything else runs through.
Then the expenses split into two kinds.
Direct expenses are for the business part of your home alone, like painting that room. Those are deductible in full.
Indirect expenses are for keeping up and running the whole home, like rent, utilities, insurance and general repairs. Those are deductible at your business-use percentage. If the office is 10 percent of the home, 10 percent of the electricity bill is deductible.
If you own your home, one more piece belongs here: depreciation. That is section 5. If you rent, there is no depreciation at all and your rent is simply an indirect expense.
Which method produces the larger deduction depends on your own numbers, and the next section is how to get a first read on it.
Which method is likely to be better for you
There is a quick screen you can do in your head, and then there is the calculator, which is the actual answer. Use the screen to know roughly where you stand, not to decide.
The screen. Add up a year of your deductible home costs, rent or deductible mortgage interest, utilities, insurance and repairs, then divide by the total square footage of your home. If that is under $5 per square foot, the simplified method is likely to be worth more. Over $5, the regular method is likely to be worth more.
The reason is that the two methods scale the same way. The simplified method pays $5 for each square foot of office. The regular method pays your home’s cost per square foot for each square foot of office, because the business-use percentage is just office area divided by home area. The office size sits on both sides and drops out, which leaves $5 against your cost per square foot.
When the screen holds, and when it does not. The comparison above is clean only when all of the following are true:
- Your office is 300 square feet or less. Above that the simplified method stops paying for the extra area and the regular method does not, which pushes toward the regular method.
- You rent, or you are setting depreciation aside. Depreciation is an extra deduction on the regular side only, so for owners it pushes toward the regular method. In Example A below it is worth $615.36 on its own.
- The income limit is not biting. If your business income is low enough to cap the deduction, what you actually get is not what either method calculates.
- You have no direct expenses. Those count in full on the regular side and are not reflected in a per-square-foot figure.
- You have no carryover coming in from an earlier year.
- You are using the space for the whole year at a constant size, and none of the situations in the advanced section apply.
If you itemize, the state and local tax rules in section 7 can move part of your property taxes into a different position on the form, which matters when the income limit binds.
So treat the $5 figure as a screen, not a rule. Run both methods in the calculator and use the numbers it gives you. That is what it is for.
There is also a second question underneath the dollar comparison, and it is not about this year at all. If you own and use the regular method, the depreciation follows you to the day you sell the house. Section 8 covers that.
You choose the method each year, on your timely filed original return for that year. Once you have chosen for a year, you cannot change it for that year afterwards.
Depreciation on your home
This section applies only if you own. Renters can skip it.
Depreciation is an allowance for wear and tear on the part of your home you use for business. You cannot depreciate land, only the building.
Form 8829 asks for four historical figures, and historical is the important word. All four are measured at the date you first began using the home for business, not today.
- The adjusted basis of your home including land at that date
- The fair market value of your home including land at that date
- The part of the basis attributable to land
- The part of the fair market value attributable to land
The form takes the smaller of your basis and the fair market value, subtracts the land, multiplies by your business-use percentage, and then multiplies by a percentage determined by when you first used the home for business.
These figures never get updated. Not for depreciation you have already claimed, and not for what the house is worth now. The Form 8829 instructions say so directly. If you first used the home for business in 2019, you use 2019 figures for as long as you own it. This is the most common mistake on this calculation, and the calculator’s field hints say so.
The IRS does not publish a method for splitting land from building. People generally take it from property tax records or a closing statement. This calculator asks you for the figures and does not guess at them.
One caveat about the two IRS sources. Publication 587 describes this calculation by excluding land first and then comparing basis against fair market value. Form 8829 compares first, with land included, and then subtracts land. Those are not the same operation and they can produce different figures. This calculator follows Form 8829, because that is the form a Schedule C filer actually files.
The deduction limit and your two carryovers
Your home office deduction cannot be larger than the income the business made from the use of the home. That is true under both methods.
The limit runs off your tentative profit, which is Schedule C line 29, the figure after your other business expenses. It is not your gross receipts. If your business lost money, there is no deduction this year under either method.
What happens to the amount over the limit depends on the method, and the difference is real money.
Under the regular method it carries forward. It goes to the next year in which you use actual expenses and is subject to that year’s limit, whether or not you are still living in the same home.
Under the simplified method it does not carry over at all.
The regular method carries two separate buckets forward, and this calculator keeps them separate because Form 8829 does. Operating expenses carry on one line. Excess casualty losses and depreciation carry on another. They are never added together.
There is an order to all of this, and it is why the next section matters. Depreciation of your home is taken last, so it is the first thing squeezed out when the limit binds.
If you itemize, where your mortgage interest and taxes land
This section only matters if you itemize deductions. If you take the standard deduction, skip it.
Mortgage interest and real estate taxes are unusual on Form 8829 because they would be deductible anyway. That gives them a special position: they go in above the deduction limit, and are allowed regardless of it. Everything else, insurance, utilities, repairs and depreciation, goes below the limit and has to fit inside whatever is left.
Two different figures are at work here, and it is worth keeping them apart.
The trigger. If your total state and local income or sales taxes, real estate taxes and personal property taxes come to no more than $10,000, or $5,000 if you file separately, Form 8829 skips the whole calculation and your real estate taxes go in above the limit in the ordinary way. Over that amount, the form runs a worksheet.
The cap. The overall limit on deducting state and local income, sales and property taxes is $40,000, or $20,000 if you file separately. That limit is reduced if your modified adjusted gross income is more than $500,000, or $250,000 filing separately, but it is never reduced below $10,000, or $5,000 filing separately.
What the worksheet does. It works out how much room the overall cap leaves for the business share of your real estate taxes. Whatever fits stays above the deduction limit. Whatever does not fit moves below it, where it competes with your insurance, utilities and depreciation for whatever the income limit allows. The same dollars, a different position on the form, and possibly a different deduction.
Where this calculator stops. For filers whose modified adjusted gross income puts them into the reduced-cap range, the worksheet becomes circular: the home office deduction changes your income, your income changes the cap, and the cap changes the home office deduction. Form 8829 tells you to repeat the calculation until it settles. This calculator does not do that. If your situation reaches that point it says so and calculates the simplified method only, and it shows no comparison, because half a comparison is worse than none. Form 8829 itself, tax software, or a tax professional will handle it.
What depreciation means when you sell
This is the part people do not expect, and it is why the simplified method’s zero depreciation is a real feature rather than only less paperwork.
When you sell your main home you can usually exclude a large amount of the gain from tax. You cannot exclude the part of the gain equal to the depreciation allowed or allowable on the business part of your home for periods after May 6, 1997.
Here is the part that surprises people. You must also reduce the basis of your home by the depreciation that was allowable, whether or not you actually claimed it. Choosing not to take it does not avoid the basis reduction. If you were entitled to depreciation, the adjustment applies either way.
So the comparison between the two methods is not only about this year’s number. If you own and use the regular method, the depreciation has an effect at the point of sale that the simplified method does not create, because the simplified method treats the depreciation allowable for the business part of your home as zero for those years.
This calculator does not compute your tax on a sale, your gain, or any recapture figure. It states that the consequence exists so you can weigh it, or take it to someone who can price it.
Common mistakes
Treating the deduction as a refund. It reduces the profit you are taxed on. It does not come back to you dollar for dollar.
The guest bedroom. Exclusive use means only business use. A room that doubles as anything else does not qualify, however much work happens there.
Using today’s home value. The depreciation figures are frozen at the date business use began. Today’s numbers give the wrong answer.
Entering gross receipts as tentative profit. Line 8 is Schedule C line 29, after your other business expenses.
Assuming you can switch after filing. You choose per year on your original timely filed return, and once chosen for that year it is fixed.
Deciding from square footage alone. A bigger office does favor the regular method above 300 square feet, because of the simplified cap. Below that, office size affects both methods the same way. What separates them is what your home costs, whether you own, and whether the income limit binds.
What this does to your quarterly payment
If you pay quarterly estimated tax, a home office deduction reduces your Schedule C net profit, which reduces both your income tax and your self-employment tax. That changes what you should be paying each quarter.
This page deliberately does not estimate your tax saving. Doing that properly means knowing your filing status, your bracket, your self-employment tax and your qualified business income deduction, which is a different calculation. Take the deduction figure to the Quarterly Estimated Tax Calculator to see what it does to your next payment, or to the Self-Employed Tax Estimator for the annual picture.
If you are weighing self-employment against a salaried role, the 1099 vs W2 Calculator covers that comparison, and the home office deduction is one of the things only the self-employed side gets.
Worked examples
Example A: an owner, where the regular method wins
Dana runs a design business from a 200 square foot room in a 2,000 square foot house, used only for work. She takes the standard deduction. Her tentative profit for the year is $40,000. The house cost her $300,000 including land, of which $60,000 was land, and it was worth $320,000 when she started. She began using the room for business in January of last year.
Business-use percentage. 200 divided by 2,000 is 10.00 percent.
Simplified method. 200 square feet times $5 is $1,000.00.
Regular method, indirect expenses. Mortgage interest $14,000, real estate taxes $4,200, insurance $1,400, repairs $1,200 and utilities $3,600 come to $24,400. At 10 percent that is $2,440.00. Because Dana takes the standard deduction, all of it sits below the deduction limit.
Regular method, depreciation. Her basis of $300,000 is lower than the $320,000 the house was worth, so the form uses $300,000. Subtract $60,000 of land and the building basis is $240,000. At 10 percent, the business basis of the building is $24,000. She began before this year, so the rate is 2.564 percent. That gives $615.36.
The limit. Her deduction limit is her $40,000 tentative profit, so nothing is squeezed out. Both carryovers are zero.
Total regular method deduction: $2,440.00 plus $615.36 equals $3,055.36.
The regular method wins by $2,055.36.
Two things drive that. Her home costs $24,400 a year across 2,000 square feet, which is $12.20 per square foot, well above the $5 screen. And she owns, so depreciation adds $615.36 that the simplified method would not give her at all. Her records are worth keeping. Before she settles on the regular method, section 8 is the other half of the decision.
Example B: a renter, where the simplified method wins
Marcus runs a consulting business from a 100 square foot room in a 3,000 square foot rented house he shares. His tentative profit is $30,000. He pays $10,800 a year in rent, $1,800 in utilities and $240 for renters insurance.
Business-use percentage. 100 divided by 3,000 is 3.33 percent.
Simplified method. 100 square feet times $5 is $500.00.
Regular method. His indirect expenses total $12,840. At 3.33 percent that is $428.00. He rents, so there is no depreciation. His deduction limit is $30,000, far above either figure, so nothing is limited.
The simplified method wins by $72.00.
Marcus’s home costs $12,840 across 3,000 square feet, which is $4.28 per square foot, under the $5 screen, and as a renter he has no depreciation to add to the regular side. A small office in a large, inexpensive home is the shape where the flat rate tends to come out ahead. He also avoids tracking and allocating actual home expenses for this deduction.
Notice the margin is only $72. When the two methods land close together, the deciding factor is usually not the money. It is whether tracking a year of expenses is worth $72 to you.
Advanced situations and edge cases
This calculator declines to answer in several situations rather than give you a number that looks right and is not. Each one is listed here so you know why.
Casualty losses
If you have casualty losses attributable to this home, the regular method is not calculated. Casualty losses have their own position in the Form 8829 ordering and their own interaction with Form 4684, which this version does not implement. The simplified method still calculates, and no comparison is shown.
High income with a reduced state and local tax cap
Covered in section 7. If the state and local tax worksheet reaches the circular step, the regular method is not calculated.
Homes first used for business before 1994
The depreciation percentage for homes first used for business before 1994, or between 1987 and May 1993, or before 1987, comes from tables in other IRS publications that this calculator does not implement. Rather than substitute a rate, it declines the regular method.
Stopping business use during the year
If you stopped using the home for business before the end of the year, the depreciation percentage comes from a different table that adjusts for the shortened period. Not implemented, so the regular method is not calculated.
Part-year use or a change in office size
This one is different, because the simplified method does calculate.
If you did not use the space for the whole year, or the size changed, the simplified method averages your allowable square footage across all twelve months. Two rules apply. Any month with fewer than 15 days of qualified business use counts as zero. Any single month is capped at 300 square feet before averaging.
The calculator asks for the area used in each month and does the averaging. The regular method has its own part-year treatment that this version does not implement, so no comparison is shown.
Additions or improvements made after business use began
If you added or improved something after you began using the home for business, that work is depreciated on its own separate schedule rather than as part of the original building basis. This calculator does not build those schedules.
Rather than show a regular-method figure that is knowingly too low, it declines to calculate the regular method at all. An understated number is worse than no number, because it can point you at the wrong method.
Situations outside this calculator entirely
Daycare facilities, storing inventory or product samples, more than one home or more than one business, rental use, partners, farmers filing Schedule F, and S-corporation owners all have different rules and different forms. The calculator identifies these and points you elsewhere rather than guessing.
The Publication 587 and Form 8829 difference
Noted in section 5. Publication 587 describes the depreciable basis by excluding land before comparing basis and fair market value. Form 8829 compares first with land included, then subtracts land. Those can produce different figures. This calculator follows Form 8829.
Frequently asked questions
No. A home office deduction cannot be claimed as an employee. Working from home full time does not change it, and neither does using the simplified method. The deduction is for self-employed people and certain business owners.
Under the simplified method it is $5 per square foot of qualified business space. Under the regular method there is no per-square-foot rate. You deduct your business-use percentage of your actual home expenses, which may work out to more or less than $5 per square foot.
The simplified method is limited to 300 square feet, so $1,500 is the most it can produce. The regular method has no square-footage limit. Both methods are limited by the income from the business use of the home.
No, but it has to be a clearly identifiable space used only for business. A permanent partition is not required. What is required is that nothing else happens there. A desk in the corner of a room the family also uses does not qualify.
Yes, year to year. You choose by using that method on your timely filed original return for that year. Once you have chosen for a year, you cannot change it for that year afterwards. It is worth running both each year, because a change in your rent, your mortgage or your office size can change which one is better.
If you own your home and qualify, depreciation is part of the regular method’s calculation. Skipping it does not avoid the effect at sale, because the basis of your home is reduced by depreciation that was allowable whether or not you claimed it. If you want to avoid depreciation on the business part of your home, the simplified method is the route, since it treats that depreciation as zero for those years. Renters have no depreciation either way.
You cannot exclude the part of your gain equal to depreciation allowed or allowable on the business part of your home for periods after May 6, 1997, and you must reduce your home’s basis by the allowable depreciation even if you never claimed it. This calculator does not compute your tax on a sale. It flags the consequence so you can factor it in or get it priced properly.
Not this year. The deduction is limited to the income from the business use of the home, so a loss means no deduction. Under the regular method the unused amount carries forward to the next year you use actual expenses. Under the simplified method it does not carry over.
The simplified method handles it by averaging your allowable square footage over twelve months. A month with fewer than 15 days of qualified use counts as zero, and any month is capped at 300 square feet before averaging. This calculator does that averaging for you. It does not calculate the regular method for a part-year, so no comparison is shown in that case.
Assumptions, limitations and disclaimers
This is an estimate, not tax advice. This calculator is educational. It does not replace Form 8829, tax software, or a tax professional, and it does not file anything for you.
What it assumes. That you are self-employed and file Schedule C, that your space meets the exclusive and regular use tests, that you have one home and one business, and that you are asking about United States federal tax. Square footage is the allocation method used throughout.
What it does not cover. Casualty losses. The circular state and local tax worksheet for filers in the reduced-cap range. Homes first used for business before 1994. Stopping business use mid-year. The regular method for part-year or changed-area use. Separate depreciation schedules for additions and improvements made after business use began. Daycare, inventory storage, multiple homes or businesses, rental use, partners, Schedule F filers and S-corporation owners. State tax treatment. Any estimate of what the deduction saves you in tax.
Where a situation is not covered, the calculator says so and declines to produce a regular-method figure rather than showing one that is incomplete.
Sources. IRS Publication 587, Business Use of Your Home. Form 8829, Expenses for Business Use of Your Home, and its instructions. The IRS page on the simplified option for the home office deduction.
REGULATED VALUES — reviewed annually before each tax year.
- The simplified rate of $5 per square foot and the 300 square foot limit.
- The depreciation percentages, currently 2.564 percent for a home first used for business in an earlier year, and a month-by-month table for the first year.
- The state and local tax figures: the $10,000 and $5,000 worksheet trigger, the $40,000 and $20,000 overall cap, the $500,000 and $250,000 income level at which the cap starts being reduced, and the $10,000 and $5,000 floor below which it is not reduced.
These are the regulated figures this calculator tracks explicitly and re-verifies annually. The surrounding tax guidance is also re-reviewed when the governing IRS sources change.
Last reviewed: August 11, 2026