Home office deduction calculator
Compare the simplified and actual expense methods for your home office. It’s an estimate from your numbers, not advice; Krystal checks the real picture on a call.
Your home
Used for depreciation in the actual expense method.
Land isn't depreciable. Typically 15–25% for most homes.
Your office
7.5% of your home
Business income and home expenses
Your total self-employment income before expenses.
Business expenses besides the home office: supplies, software and so on.
Net business income$85,000
Annual home expenses ($27,900)
Interest portion only (from Form 1098).
Electric, gas, water, internet, trash.
General home repairs, not improvements.
100% deductible: office furniture, paint, repairs specific to the office.
Recommended deduction
Illustrative$3,131 / year
Using the Actual Expense Method.
| Summary | Amount |
|---|---|
| Business share of your home | 7.5% |
| Estimated federal tax effect (at 22%) | $689 |
| Simplified method ($5/sq ft) | $750 |
| Actual expense method | $3,131 |
Method comparison
Comparison
Simplified: $750
| Item | Value |
|---|---|
| Simplified | $750 |
| Actual expense · Recommended | $3,131 |
Why actual expense: $2,381 more a year
- Actual method saves you $2,381 more per year
- Includes $538 in depreciation deductions
| Actual expense method | Amount |
|---|---|
| Business share of home expenses | $2,093 |
| Direct office expenses | $500 |
| Depreciation | $538 |
| Gross deduction | $3,131 |
Audit risk
0/ 100 · Low Risk
Your home office claim appears well supported.
Audit risk: 0 / 100 · Low Risk
| Mark | Value |
|---|---|
| Audit risk | 0 / 100 · Low Risk |
Documentation checklist
- Keep photos of your dedicated office space
- Document your regular business hours worked from home
- Save all receipts for home expenses
- Keep a log of client meetings held at your home office
The score is an estimate based on common audit triggers. Documentation for every claim is your best protection, whatever the score.
Depreciation recapture if you sell your home
When you sell your home, depreciation claimed (or allowed) is recaptured and taxed at up to 25%.
| Recapture | 5 years | 10 years |
|---|---|---|
| Annual depreciation | $538 | $538 |
| Depreciation claimed | $2,690 | $5,380 |
| Tax effect of the deduction (at 22%) | $592 | $1,184 |
| Recapture tax (at 22%) | −$592 | −$1,184 |
| Net benefit | $0 | $0 |
The net benefit can be positive, zero or small. It depends on your bracket now versus the recapture rate later, and how long you hold the home.
Ways to manage recapture
- Use the simplified method to avoid depreciation entirely
- Convert home to rental before sale (defers personal residence exclusion)
- Plan for recapture tax in your sale proceeds
An estimate for education, not tax advice. Your deduction depends on your circumstances and your records, and the home office deduction has specific IRS requirements.
Method
How the estimate works.
Who can take the deduction
If you’re self-employed and use part of your home exclusively and regularly for business, you may be able to deduct expenses for that space. The office must be used:
- Exclusively: only for business. A desk in your living room doesn’t qualify.
- Regularly: consistently for business, not just occasionally.
- As your principal place of business: or where you meet clients or customers, or a separate structure.
Simplified method ($5 per square foot)
Deduct $5 per square foot of office, up to 300 square feet (a $1,500 maximum). The simplified method:
- Needs minimal recordkeeping
- Has no depreciation to calculate or recapture
- Can’t carry unused deductions forward
- Suits smaller offices or anyone who prefers simplicity
Actual expense method (Form 8829)
The deduction is the business share of your home expenses:
- Mortgage interest or rent
- Property taxes
- Utilities (electric, gas, internet)
- Insurance
- Repairs and maintenance
- Depreciation (for owned homes)
It often gives a larger deduction, but needs more documentation and brings depreciation recapture when you sell the home.
What the calculator assumes
- The tax estimate uses the federal bracket you pick
- Depreciation recapture uses your bracket, up to 25% (unrecaptured Section 1250 gain)
- The actual expense method can’t exceed net business income; the rest carries forward
- The audit risk score reflects common triggers, not IRS data
FAQ
Home office questions.
Who can claim the home office deduction?
Self-employed individuals who use part of their home exclusively and regularly for business can claim this deduction. W-2 employees generally cannot claim it (the deduction was suspended for employees from 2018-2025 under the TCJA). The space must be your principal place of business, or where you meet clients/customers.
What is the simplified method?
The simplified method allows you to deduct $5 per square foot of your home office, up to 300 square feet (maximum $1,500 deduction). You don't need to track actual expenses or calculate depreciation. It's simpler but may result in a smaller deduction than the actual expense method.
When is the actual expense method better?
The actual expense method is typically better when you have high home expenses (mortgage interest, property taxes, utilities) or a larger office relative to your home size. It requires more recordkeeping but often results in a larger deduction. Our calculator compares both methods to show you which saves more.
What is the "regular and exclusive use" test?
To qualify, your home office must be used (1) regularly for business — not occasionally, and (2) exclusively for business — you can't use the space for personal activities. A desk in your living room doesn't qualify. A dedicated room with a door is ideal for audit defense.
What is depreciation recapture?
If you own your home and use the actual expense method, you must depreciate the business portion over 39 years. When you sell the home, any depreciation you claimed (or should have claimed) is "recaptured" and taxed at up to 25%. This can reduce the net benefit of the actual expense method.
Can my deduction exceed my business income?
No. The home office deduction is limited to your net business income after other deductions. If your deduction exceeds this limit, the excess carries forward to future years. The simplified method avoids this complexity since the maximum is only $1,500.
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Start with fifteen minutes.
Krystal calls you to see whether LeCPA fits what you’re building.