Claiming a Home Office as a Freelancer
The test you have to pass first
The space must be used regularly and exclusively for business. Exclusively is the word that disqualifies most people: a desk in the corner of a bedroom qualifies only if that area is not also used for anything else. A dining table you clear at six o'clock does not, however much work happens on it. The space must also be your principal place of business, or somewhere you regularly meet clients.
One consolation for the strictness: if you do qualify, the home office is what turns trips from home to a client into business miles rather than commuting.
Simplified or regular
The simplified method is $5 per square foot up to 300 square feet, so a maximum of $1,500. No receipts, no depreciation, no Form 8829 — you write one number on your return.
The regular method takes the business-use percentage of your home and applies it to actual costs: rent or mortgage interest, property tax, utilities, insurance, repairs, and depreciation if you own. It takes more record-keeping and usually produces a larger deduction, particularly with high rent or a big workspace.
You can switch between methods from year to year. Both are capped at the gross income from the business — a home office cannot create or deepen a loss.
Frequently Asked Questions
Can I claim a home office if I rent?
Yes, and renting often produces a larger deduction than owning, because the business-use share of rent is usually bigger than the share of mortgage interest plus property tax. There is no depreciation to worry about either.
Does claiming it increase my audit risk?
The deduction is legitimate and widely claimed. What draws attention is claiming it when the exclusive-use test is not met, or claiming a share of the home that is implausibly large. Measure the space, keep a note of how you arrived at the percentage, and claim what is actually yours.
What happens when I sell the house?
If you used the regular method and claimed depreciation, that depreciation is recaptured when you sell — taxed as income rather than sheltered by the usual exclusion on a main home. The simplified method claims no depreciation, so nothing is recaptured. It is one reason some owners prefer it despite the smaller deduction.
Can employees claim this?
No. The deduction for unreimbursed employee expenses was suspended and remains unavailable, so working from home for an employer does not qualify. This is for self-employed people filing Schedule C.