What Percentage of a House Can I Claim for a Business Write-Off?
According a study conducted by the U.S. Census Bureau in 2010, more than 13.4 million people worked from home at least one day a week. This represents 9.5 percent of all workers, including people who are self-employed. The study found that, on average, people working from home made more money than traditional office workers, with the added benefit of tax advantages. Since the Internal Revenue Services allows you to write off a portion of your home as a business expense, it is expedient to be able to accurately calculate what percentage can be written off.
Use a Floor Plan
Print out a copy of the floor plan of your home, which can often be found on on the tax assessor's page of your county's website. A home appraisal will also have a floor plan included. The floor plan should include the dimensions of each room and the total square footage of your home.
Calculate Square Footage
Identify the rooms in your home that are used for work. Calculate the square footage of each one by multiplying its length by its width. For example, a room 8 feet long and 8 feet wide is 64 square feet.
How Is It Used?
In order to qualify under IRS guidelines, the space must be either exclusively or regularly used for business. Occasional use does not qualify. For example, meetings that are consistently scheduled to take place in your home would constitute regular use. However, a colleague stopping by to chat about clients does not warrant an exemption.
Calculate the percentage of time that each identified room is used for business purposes. For example, a home office is used for work 100 percent of the time. An attached restroom can also be considered as used exclusively for business. A dining room where regular meetings take place may be used for business only 30 percent of the time, since the family uses the space as well. Similarly, a hallway bathroom would qualify as being used for business purposes only during the time the meetings are taking place.
Add Square Footage
Add the square footage of each room in the home that is used for business. For example, say your home office is 450 square feet and the dining room, which is used for business 30 percent of the time, is 200 square feet. Multiple 200 by 30 percent to get 60 square feet and add that result to 450, for a total of 510 square feet of your home that is used for business purposes.
Finally, calculate the percentage of your home that is used for business by dividing the square footage of rooms used for business by the total square footage of your home. For example, continuing with our example, if the total square footage of your home is 3,100, divide the 510 square feet used for business purposes by 3,100, which will give you 0.164. In other words, 16 percent of your home is used for business. This percentage can be applied to expenses associated with the home when determining what can be deducted as a business expense.
Bethany Wood has been a writer since 2003. She contributes to magazines, industry publications, websites and various businesses.