Simplified Method
Multiply your home office square footage (up to 300 sq ft) by $5 per square foot, for a maximum deduction of $1,500 — fast and requires minimal documentation, but often smaller than the actual expense method for larger offices or higher housing costs.
Actual Expense Method
Calculate the percentage of your home used exclusively for business, then apply that percentage to your actual rent or mortgage interest, utilities, insurance, and repairs — typically larger for filers with higher housing costs relative to their office's share of square footage.
The 'Exclusive Use' Requirement
Either method requires the space be used regularly and exclusively for business — a kitchen table used for both family dinners and work doesn't qualify, but a spare room used only as an office does.
Which Method to Choose
Calculate both methods and use whichever produces the larger deduction — most tax software will do this comparison automatically if you enter both square footage and actual home expense figures.
This page is for educational purposes and isn't personalized financial or tax advice. Figures, rates, and program details change frequently — confirm current terms directly with lenders, tax professionals, or the IRS before acting.