cpa-tax
Home Office Deduction Calculator (2026)
If you use part of your home regularly and exclusively for business, you can deduct a portion of your home expenses. The IRS offers two methods: simplified ($5/sqft, capped at 300 sqft for a max $1,500 deduction) or regular (your business-use percentage × actual home expenses). This calculator compares both for your specific situation and recommends the larger deduction.
Educational estimate using current-year projections — not tax advice. Verify with a CPA against your full return before filing or acting on this output.
How it works
Methodology
Inputs
- Office square footage
- Square footage of the dedicated, exclusively-used office space (capped at 300 for the simplified method).
- Total home square footage
- Total square footage of your home. Used to compute business-use % for the regular method.
- Annual home expenses
- Rent or mortgage interest, utilities, insurance, repairs, depreciation — totaled for the year.
Formula
Simplified method = min(Office sqft, 300) × $5 Business-use % = Office sqft ÷ Total home sqft Regular method = Annual home expenses × Business-use % Verdict = whichever method produces the larger deduction
Assumptions
- Requires 'regular and exclusive use' of the space for business — guest rooms and family TV areas don't qualify.
- Regular method allows depreciation on owned homes, which creates a depreciation-recapture event when you sell. Simplified avoids that.
- Not an offer, not approval, consult a CPA before filing.
Worked examples
Renter with modest home expenses
- Office sqft
- 120
- Total home sqft
- 1,000
- Annual home expenses
- $28,000 (rent + utilities + renters insurance)
Simplified: $600. Regular: 12% × $28K = $3,360. Regular method wins — track receipts.
Frequently asked
Questions readers ask
Which is better: simplified or regular home office method? +
It depends on your home expenses. Simplified is easier ($5/sqft, no record-keeping). Regular requires tracking rent/mortgage interest, utilities, insurance, repairs, depreciation — but typically produces a larger deduction if you have meaningful home costs. This calculator runs both numbers so you can pick.
Can I take the home office deduction if I rent? +
Yes. Rent (allocated to the business-use percentage of your home) is one of the expenses included in the regular-method calculation. The simplified method gives a flat $5/sqft deduction regardless of whether you rent or own.
What counts as 'regular and exclusive use'? +
Per IRS Publication 587: the home office space must be used for business on a continuing basis (not just occasionally) AND ONLY for business (not as a guest room, family TV area, etc.). A dedicated spare bedroom set up as an office qualifies; a kitchen table where you sometimes work doesn't.
I also have a W-2 job — can I still take the home office deduction for my side business? +
Having a separate W-2 job elsewhere doesn't disqualify you. The deduction is available for the portion of your home used regularly and exclusively for your own trade or business (reported on Schedule C or through your entity). What it does NOT cover is unreimbursed home-office expenses tied to your W-2 employment itself — that's a different, more restricted category. Keep the two uses (employee vs. self-employed) and the square footage clearly separated.
Does the simplified method let me deduct depreciation separately? +
No. The $5/sqft simplified rate already has an implicit allowance for expenses like depreciation baked in — you can't layer a separate depreciation deduction on top of it. Depreciation is only available under the regular method, where it's part of the actual home expenses you allocate by business-use percentage. That's also why the regular method creates a depreciation-recapture event when you sell an owned home and the simplified method doesn't.
This tool is for educational purposes only and is not an offer, approval, financial, legal, or tax advice. Tax outputs depend on your full return — consult a CPA before filing. ClearValue Lending is a funding platform.
https://clearvaluelending.com/tools/home-office-deduction-calculator