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What Can I Expense When Running a Business Out of My Home?

By Ryan Himmel Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

What can I expense when running a business out of my home? For example, can I expense rent?

You're in good company with running your business from home. Recently a growing number of self-employed individuals manage their business from home for the convenience and fixed-cost savings. As such, the Internal Revenue Service has taken note of this and has scrutinized home-office deductions. Still, there are several deductions that you may be eligible to claim on your tax return, which may include your rent.

Generally, you can deduct the business portion of these expenses: real-estate taxes, qualified mortgage-insurance premiums, deductible mortgage interest, rent, casualty loss, utilities, insurance, depreciation, security systems, and repairs.

How do you calculate the business portion of these expenses such as rent? You would divide the total amount of square feet used for business purposes by the total square footage of your home. For instance, if your business office was 500 square feet and your entire home was 2,000 square feet, you would be able to treat 500/2,000 or 25% of your rent expense as a business expense. Please note that the business must be up and running to treat this expense as business expense. Therefore, if you launched your business in September, you could claim only the business expense from September onward.

Ryan Himmel

Entrepreneur, CPA, Founder & CEO of BIDAWIZ

Ryan Himmel is a CPA and technology entrepreneur that has dedicated over a decade of his work toward providing solutions to help accountants and small-business owners better run their firms. He is the founder and CEO of BIDaWIZ, a professional network for small businesses and entrepreneurs to obtain trusted tax advice and services. He also oversees TaxResearchPro, an on-demand tax research support service for solo practitioners and small to mid-sized accounting firms across the U.S. Himmel regularly contributes to his tax blog.

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