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

By Ryan Himmel

entrepreneur daily

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

Head of Financial Partnerships, Xero Americas

Ryan Himmel is a CPA and financial technology executive who has dedicated over a decade of his work toward providing solutions to help accountants and small-business owners better run their firms. Himmel currently leads financial partnerships in the Americas for Xero.

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