Home Office Deductions in General
Whether you own your home or rent it, you may be able to deduct a portion of the costs of your home if you use it for business. This is so for both employees and self-employed individuals. However, the law is very strict on what constitutes business use of a home. First, you must use the portion of your home exclusively and regularly for business. Then you must meet 1 of 3 tests. The home office must be:
Exclusively and Regularly
Exclusive use of a home office means that it is used solely for your business activities and not for personal purposes, including investment activities. If you have a spare bedroom or a den that you have equipped with a computer, telephone, and perhaps a fax/modem, you cannot meet the exclusive use test for a home office if you also use that room as a guest room or family den. A kitchen will never qualify even though it is used for a legitimate business purpose because it is also used for personal reasons (although a portion may be used solely for business in some cases).
The exclusive use test does not require you to set aside an entire room for business purposes. You can meet this test if you clearly delineate a portion of a room for business. It must be a separately identifiable ...