About the Home Office Deduction Calculator
This calculator works out the home office deduction both ways the IRS allows and tells you which is larger. The simplified method is $5 per square foot of office space, up to 300 square feet ($1,500). The regular method, figured on Form 8829, takes the business percentage of your home — office square feet divided by the home’s total — and applies it to mortgage interest, property tax, insurance, utilities, repairs, rent and depreciation on the building.
It is built for self-employed people, freelancers, independent contractors and small-business owners who use part of their home regularly and exclusively as their principal place of business, or to meet clients. Employees cannot claim the deduction on their federal return. The calculator applies the gross income limit in the Form 8829 order — mortgage interest and taxes first, then operating costs, then depreciation — and shows any amount you would carry forward to next year under the regular method.
Depreciation uses the 39-year nonresidential schedule with the mid-month convention (2.564% a year, less in the first year), on the business share of the home’s cost excluding land. Keep in mind that depreciation reduces your basis and is taxed as unrecaptured Section 1250 gain when you sell, while the simplified method avoids that. The rules have been unchanged since 2013 and apply to the 2026 tax year.
With the default inputs, the largest home office deduction is $2,679.20. Change any value above to recalculate instantly.
How to use the home office deduction calculator
- 1Measure the office and enter its area and your home’s total area.
- 2Enter your business income limit (business income minus non-home expenses).
- 3Add yearly mortgage interest, property tax or rent, insurance, utilities and repairs.
- 4Enter the home’s cost excluding land and when you started using the office.
- 5Compare the simplified and regular deductions and check any carryover.
Formula and method
The simplified method multiplies the office area, up to 300 square feet, by a flat $5 rate. It cannot exceed your business income, it has no depreciation and no carryover. The regular method allocates actual home costs by the business-use percentage. Following Form 8829, the business share of mortgage interest and real estate taxes is allowed first; operating expenses (rent, insurance, utilities, repairs and direct office costs) are allowed up to the remaining business income; and depreciation is allowed last, up to whatever income is left. Disallowed operating costs and depreciation carry forward.
Depreciation treats the office as 39-year nonresidential real property with the mid-month convention: 2.564% of the business share of the building basis each full year, or the first-year percentage for the month you started (2.461% in January down to 0.107% in December). Land is never depreciable. Casualty losses, excess mortgage interest beyond the Schedule A limits and the allocation for day-care facilities are not modelled.
- B%
- Business-use percentage of the home
- Operating
- Rent, insurance, utilities, repairs and HOA dues for the whole home
- MACRS %
- 2.564% a full year, or the first-year rate for the month first used
Worked examples
200 sq ft office in a 2,000 sq ft owned home
The office is 10% of the home. The simplified method gives 200 × $5 = $1,000. The regular method allows $1,300 of mortgage interest and tax, $610 of insurance, utilities and repairs, and $769.20 of depreciation (10% × $300,000 × 2.564%), for $2,679.20 — about $804 of tax at 30%.
Renter with a 150 sq ft office
A renter can deduct 15% of $26,700 of rent, insurance and utilities: $4,005. That far exceeds the $750 simplified deduction because rent is large and there is no depreciation limit to worry about.
Low business income triggers the limit
With only $2,000 of business income, the $1,300 of interest and taxes is allowed first, then $610 of operating costs, leaving $90 for depreciation. The office started in July, so full-year depreciation would be $353.10 (1.177%); the other $263.10 carries forward.
Frequently asked questions
How much is the simplified home office deduction?+
It is $5 per square foot of the area used regularly and exclusively for business, up to 300 square feet, so the maximum is $1,500 a year. The rate has not changed since the IRS introduced it in 2013, and you cannot deduct depreciation or carry forward any excess.
Which home office method gives a bigger deduction?+
The regular method usually wins when you own an expensive home, have high mortgage interest, rent, utilities or insurance, or use a large share of the home. The simplified method is often better for small offices in modest homes and avoids depreciation recapture when you sell.
Who qualifies for the home office deduction?+
Self-employed people and business owners who use part of their home regularly and exclusively as their principal place of business, to meet clients, or as a separate structure used for business. A storage area for inventory or a daycare facility can also qualify. W-2 employees cannot deduct a home office on their federal return.
Can I switch between the simplified and regular methods?+
Yes, you can choose either method each year. If you switch back to the regular method, depreciation for that year uses the optional depreciation tables for the remaining recovery period.
Is the home office deduction limited by income?+
Yes. Under both methods the deduction cannot exceed the gross income from the business use of your home minus your other business expenses. Under the regular method, disallowed operating expenses and depreciation can be carried forward; under the simplified method the excess is lost.
Does a home office deduction cause tax when I sell my house?+
Depreciation claimed (or allowable) after 6 May 1997 is taxed as unrecaptured Section 1250 gain, at up to 25%, even if the rest of the gain qualifies for the $250,000/$500,000 home sale exclusion. The simplified method claims no depreciation, so there is nothing to recapture.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.