IRS Form 8829 “Business Use of Home” Explained

IRS Form 8829, Expenses for Business Use of Your Home, is how self-employed people figure the home office deduction using the actual-expense method. The result carries to Schedule C. Employees generally can’t deduct a home office on their federal return, even if they work from home.

Who Qualifies

Part of your home must be used regularly and exclusively for your business, and it must be one of the following:

• Your principal place of business. This includes a space used for administrative or management tasks when there’s no other fixed location where you do them.
• A place where you meet clients or customers in the normal course of business
• A separate structure, such as a detached garage or studio, used for the business

There are exceptions to the exclusive-use rule for storing inventory or product samples and for licensed daycare providers.

Two Ways to Figure the Deduction

• Simplified method: $5 per square foot of office space, up to 300 square feet, for a maximum of $1,500. You don’t need Form 8829 and you don’t claim depreciation, but you can’t carry forward unused amounts.
• Actual-expense method (Form 8829): deduct the business percentage of mortgage interest, real estate taxes, insurance, utilities, repairs and rent, plus depreciation on the business part of the home. Direct expenses for the office itself, like painting the room, are fully deductible. There’s no fixed dollar cap.

The business percentage is usually the office’s square footage divided by the home’s total square footage.

The Income Limit

Under IRC 280A, you can’t use home office expenses (other than mortgage interest, taxes and casualty losses) to create or increase a business loss. Any disallowed amount carries forward to the next year on Form 8829.

Watch Out When You Sell

Depreciation claimed on a home office, or that you could have claimed, generally must be “recaptured” and taxed when you sell the home, even if the rest of the gain is excluded under Section 121.

Recordkeeping

Keep a floor plan or measurements, photos showing exclusive use, and records of all home expenses. If you use the space for anything personal, the deduction can be disallowed. For vehicle costs, see IRS Automobile Tax Deductions Explained.

Get Help From Diehl CPA

Tax rules change often, and the right answer depends on your full financial picture. Diehl CPA, led by Mark Diehl, CPA, CFE, prepares returns and builds tax plans for investors, retirees and closely held businesses. Learn about our tax return preparation and investment tax planning services, or contact us to talk through your situation.

This article is general information, not tax or legal advice for your specific situation. Updated October 2026.