In an article published on October 5 by the real estate blog, Your Home 1 Source, Jamie Canup discusses tax laws surrounding home offices. Under the new tax law, there are no changes for those who are self-employed. However, the rules have been altered for W-2 workers. Previously, employees could potentially write off work-related itemized expenses that added up to more than 2 percent of their gross income, and for which an employer didn’t reimburse them. That no longer holds true, explains Canup.
“Generally, deductions for a home office -- whether a separate room or part of a room -- are based on the percentage of your home devoted to business use. You can also deduct a percentage of your utilities, insurance and certain other expenses, as well as depreciation of that office space,” he continues. “This requires calculating the allocable portion of those home-office expenses.”
Canup also explains that your home office must be your principal place of business and used exclusively and regularly for business. “If your home office is in your kitchen and you use it as a kitchen, you cannot write it off,” he says. “Same with office equipment. It must be used for exclusively for business and not for some hobby too. Problems arise when there’s mixed use.”
For the full article, click here.