Investor 101: Home Office Deduction

Part of your business is making money or profits and the other half is protecting as much of those profits as possible by using tax deductions. One such deduction is the home office deduction. The home office deduction allows you to take a portion of your home or apartment and deduct it as a write off against any profits. This is done by the following example:

Suppose your work office at home is a 10 X 10 room equaling 100sq ft. Now suppose that the total square footage of your house of apartment is 1000sq ft (for simplicity). Since this office space in your home or apartment is 10% of the space, then you may deduct 10% of all utility bills, Internet bills and any improvements you may have done on the house as a 'Home Office Deduction'. This space is only defined as livable space meaning kitchen, dinning room, living room and any other rooms. It does not include any bathrooms, closets, attic or basement space.

When claiming this space, you may now also claim any mileage to and from your office that is related to work. The mileage adds up quick and will be a nice portion of your tax write off.

Please remember to consult with your account or tax advisor for more details on the home office deduction! The book used as reference was featured in April 2009 "Book Review: Every Landlords Tax Deductions".

SOURCES:
Fishman, Stephen. NOLO: Every Landlords Deduction Guide. November 2008. ed 5.

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