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Home Office Deduction Calculator

Reviewed by the CalculatorHub team, edited by James Graham. Based on IRS Publication 587 and Form 8829 instructions. For self-employed filers only. Last verified 14 June 2026.

Self-employed individuals who use part of their home exclusively and regularly for business can deduct a portion of home expenses from their business income. The IRS offers two methods: the simplified method ($5 per square foot up to 300 sq ft, maximum $1,500/yr) and the actual expense method (business percentage of real home costs). This calculator computes both and shows which gives you the larger deduction. Always consult a tax professional for your specific situation, as home office deduction rules are detailed and subject to audit.

Must be used regularly and exclusively for business (IRS Pub 587)
Total area of your home, including all rooms
Annual interest (not principal) if owned; annual rent if renting
Electric, gas, water; internet is typically 100% deductible separately
Annual premium for your home insurance policy
Prorated portion; office-specific repairs can be 100% deducted separately
10.00%
$1,000.00
$1,840.00
Actual

Home office deduction formulas (IRS Publication 587)

Business Use % = Office Sq Ft / Total Home Sq Ft
Simplified Deduction = min(Office Sq Ft, 300) x $5.00
Total Actual Expenses = Mortgage Interest + Utilities + Insurance + Repairs
Actual Expense Deduction = Total Actual Expenses x Business Use %

The simplified method rate of $5.00 per square foot is set by IRS Revenue Procedure 2013-13 and has not changed since its introduction. The maximum simplified deduction is $1,500 (300 sq ft x $5). The actual expense method uses IRS Form 8829. Depreciation on the home building (not land) can also be claimed under the actual expense method but may trigger depreciation recapture tax at sale.

Simplified vs actual expense method: when to use each

  • Use the simplified method if your home expenses are low (low rent or low mortgage interest) or if you prefer to minimise recordkeeping.
  • Use the actual expense method if your home costs are high (high rent, high mortgage interest, or expensive utilities) as this typically yields a larger deduction.
  • The simplified method avoids depreciation recapture: when you sell your home, the IRS may recapture (tax) the depreciation you claimed under the actual expense method, even if you exclude the home sale gain under IRC Section 121.
  • You can switch between methods each year, choosing whichever is more beneficial.
  • The deduction under either method cannot exceed your net business income for the year (Form 8829 has a carryover provision for excess amounts).

Home office deduction: frequently asked questions

Who can claim a home office deduction?

Only self-employed individuals (sole proprietors, partners, S-corporation shareholders who are employees, and LLC members treated as self-employed) can claim the home office deduction. Employees who work from home cannot claim this deduction since the Tax Cuts and Jobs Act of 2017, even if their employer requires them to work from home. The office must be used regularly and exclusively for business.

What is the simplified method for home office deductions?

The IRS simplified method (introduced in 2013) allows self-employed individuals to deduct $5 per square foot of home office space, up to a maximum of 300 square feet, for a maximum deduction of $1,500 per year. No home-related expenses need to be tracked. The deduction cannot exceed the gross income from the business for the year.

What is the actual expense method?

The actual expense method (IRS Form 8829) calculates the business-use percentage of your home (office square footage divided by total home square footage) and applies that percentage to actual home expenses: mortgage interest or rent, real estate taxes, insurance, utilities, repairs, and depreciation. This method requires more recordkeeping but typically yields a larger deduction than the simplified method.

What does 'regular and exclusive use' mean for a home office?

The IRS requires that the home office space be used regularly and exclusively for business. 'Regularly' means on a consistent and ongoing basis. 'Exclusively' means the space is used only for business, not for personal activities. A guest bedroom with a desk does not qualify. A dedicated room used only for work qualifies. The IRS can audit home office deductions, so documentation is important.

How is home office depreciation calculated?

Under the actual expense method, you can deduct depreciation on the business portion of your home. The IRS uses a 39-year straight-line depreciation period for the residential portion used for business (not land). Depreciation basis is typically the lesser of the home's cost or fair market value at first business use, minus the value of the land. This is calculated on IRS Form 8829.

Official sources

Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.