Did you know that you may be able to deduct a portion of your home for business use – even if your business has a different primary location?
To claim a business deduction for your home there must be an area used exclusively and regularly for business. When the area is not your principal place of business, it must be a part of your home used only to meet or deal with clients, customers or patients in the normal course of business. It may also be a separate structure not attached to your home with an exclusive and regular connection to your business. For storage uses, you are required only to use the location regularly but not necessarily exclusively.
“Exclusive use” means a specific area of the home is used only for trade or business. “Regular use” means the area is used regularly for trade or business. Incidental or occasional business use is not regular use.
If your business is a corporation – including an S corporation – you may be able to claim a home office deduction under the rules that apply to employees. For an employee to deduct home office expenses, the regular and exclusive business use must be for the convenience of the employer. When a home office is merely helpful, you cannot deduct expenses for the business use of your home.
The convenience requirement is often met when the principal business location is a manufacturing facility without office space. In that case, office functions done at home by the company president may qualify as meeting the convenience condition.