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previous page Previous Page: Publication 583 - Starting a Business and Keeping Records - How To Get More Information
next page Next Page: Publication 587 - Business Use of Your Home (Including Use by Day-Care Providers) - Figuring the Deduction
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p587-000.htm#en_us_publink100013720
Publication 587

Business Use of Your Home


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(Including Use by Daycare Providers)


Reminders(p1)


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taxmap/pubs/p587-000.htm#en_us_publink100013722

Photographs of missing children.(p1)

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

taxmap/pubs/p587-000.htm#TXMP4920d3d8Introduction

The purpose of this publication is to provide information on figuring and claiming the deduction for business use of your home. The term "home" includes a house, apartment, condominium, mobile home, boat, or similar property which provides basic living accommodations. It also includes structures on the property, such as an unattached garage, studio, barn, or greenhouse. However, it does not include any part of your property used exclusively as a hotel or inn.
This publication includes information on the following.
The rules in this publication apply to individuals.
If you need information on deductions for renting out your property, see Publication 527, Residential Rental Property.
taxmap/pubs/p587-000.htm#en_us_publink100013723

Comments and suggestions.(p2)


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We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:

 
Internal Revenue Service 
Individual Forms and Publications Branch 
SE:W:CAR:MP:T:I 
1111 Constitution Ave. NW, IR-6526 
Washington, DC 20224


We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at *taxforms@irs.gov. (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.
taxmap/pubs/p587-000.htm#en_us_publink100013724

Ordering forms and publications.(p2)
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Visit www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

 
Internal Revenue Service 
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613


taxmap/pubs/p587-000.htm#en_us_publink100013725

Tax questions.(p2)
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If you have a tax question, check the information available on www.irs.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

taxmap/pubs/p587-000.htm#TXMP140b5463

Useful items

You may want to see:


Publications
 523 Selling Your Home
 551 Basis of Assets
 583 Starting a Business and Keeping Records
 946 How To Depreciate Property
 4492-A Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes
 4492-B Information for Affected Taxpayers in the Midwestern Disaster Areas
Forms (and Instructions)
 Schedule C (Form 1040): Profit or Loss from Business
 2106 : Employee Business Expenses
 2106-EZ : Unreimbursed Employee Business Expenses
 4562 : Depreciation and Amortization
 8829 : Expenses for Business Use of Your Home
See How To Get Tax Help near the end of this publication for information about getting publications and forms.
taxmap/pubs/p587-000.htm#en_us_publink100013726

Qualifying for a Deduction(p2)


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Qualifying for a Deduction

Generally, you cannot deduct items such as mortgage interest and real estate taxes as business expenses. However, you may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. Even then, your deduction may be limited. Use this section and Figure A, later, to decide if you can deduct expenses for the business use of your home.
To qualify to deduct expenses for business use of your home, you must use part of your home:
taxmap/pubs/p587-000.htm#en_us_publink100013727

Additional tests for employee use.(p2)


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If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus: If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home.
taxmap/pubs/p587-000.htm#en_us_publink100013728

Exclusive Use(p3)


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Exclusive Use

To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business. The area used for business can be a room or other separately identifiable space. The space does not need to be marked off by a permanent partition.
You do not meet the requirements of the exclusive use test if you use the area in question both for business and for personal purposes.
taxmap/pubs/p587-000.htm#en_us_publink100013729

Example.(p3)

You are an attorney and use a den in your home to write legal briefs and prepare clients' tax returns. Your family also uses the den for recreation. The den is not used exclusively in your profession, so you cannot claim a deduction for the business use of the den.
taxmap/pubs/p587-000.htm#en_us_publink100013730

Exceptions to Exclusive Use(p3)


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Exceptions to Exclusive Use

You do not have to meet the exclusive use test if either of the following applies.
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Storage of inventory or product samples.(p3)


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If you use part of your home for storage of inventory or product samples, you can deduct expenses for the business use of your home without meeting the exclusive use test. However, you must meet all the following tests.
taxmap/pubs/p587-000.htm#en_us_publink100013732

Example.(p3)

Your home is the only fixed location of your business of selling mechanics' tools at retail. You regularly use half of your basement for storage of inventory and product samples. You sometimes use the area for personal purposes. The expenses for the storage space are deductible even though you do not use this part of your basement exclusively for business.
taxmap/pubs/p587-000.htm#en_us_publink100013733

Regular Use(p3)


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To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use. You must consider all facts and circumstances in determining whether your use is on a regular basis.
taxmap/pubs/p587-000.htm#en_us_publink100013734

Trade or Business Use(p3)


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Trade or Business Use

To qualify under the trade-or-business-use-test, you must use part of your home in connection with a trade or business. If you use your home for a profit-seeking activity that is not a trade or business, you cannot take a deduction for its business use.
taxmap/pubs/p587-000.htm#en_us_publink100013735

Example.(p3)

You use part of your home exclusively and regularly to read financial periodicals and reports, clip bond coupons, and carry out similar activities related to your own investments. You do not make investments as a broker or dealer. So, your activities are not part of a trade or business and you cannot take a deduction for the business use of your home.
taxmap/pubs/p587-000.htm#en_us_publink100013736

Principal Place of Business(p3)


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Principal Place of Business

You can have more than one business location, including your home, for a single trade or business. To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must be your principal place of business for that trade or business. To determine whether your home is your principal place of business, you must consider:
Your home office will qualify as your principal place of business if you meet the following requirements.
If, after considering your business locations, your home cannot be identified as your principal place of business, you cannot deduct home office expenses. However, see the later discussions under Place To Meet Patients, Clients, or Customers or Separate Structure for other ways to qualify to deduct home office expenses.
taxmap/pubs/p587-000.htm#en_us_publink100013737

Administrative or management activities.(p4)


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There are many activities that are administrative or managerial in nature. The following are a few examples.
taxmap/pubs/p587-000.htm#en_us_publink100013738

Administrative or management activities performed at other locations.(p4)


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The following activities performed by you or others will not disqualify your home office from being your principal place of business.
taxmap/pubs/p587-000.htm#f15154t01taxmap/pubs/p587-000.htm#en_us_publink100013739
taxmap/pubs/p587-000.htm#TXMP759f3a5f
Can you deduct business use of the home expenses? Text DescriptionCan you deduct business use of the home expenses?  
taxmap/pubs/p587-000.htm#en_us_publink100013740

Example 1.(p4)


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John is a self-employed plumber. Most of John's time is spent at customers' homes and offices installing and repairing plumbing. He has a small office in his home that he uses exclusively and regularly for the administrative or management activities of his business, such as phoning customers, ordering supplies, and keeping his books.
John writes up estimates and records of work completed at his customers' premises. He does not conduct any substantial administrative or management activities at any fixed location other than his home office. John does not do his own billing. He uses a local bookkeeping service to bill his customers.
John's home office qualifies as his principal place of business for deducting expenses for its use. He uses the home office for the administrative or managerial activities of his plumbing business and he has no other fixed location where he conducts these administrative or managerial activities. His choice to have his billing done by another company does not disqualify his home office from being his principal place of business. He meets all the qualifications, including principal place of business, so he can deduct expenses (to the extent of the deduction limit, explained later) for the business use of his home.
taxmap/pubs/p587-000.htm#en_us_publink100013741

Example 2.(p5)


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Pamela is a self-employed sales representative for several different product lines. She has an office in her home that she uses exclusively and regularly to set up appointments and write up orders and other reports for the companies whose products she sells. She occasionally writes up orders and sets up appointments from her hotel room when she is away on business overnight.
Pamela's business is selling products to customers at various locations throughout her territory. To make these sales, she regularly visits customers to explain the available products and take orders.
Pamela's home office qualifies as her principal place of business for deducting expenses for its use. She conducts administrative or management activities there and she has no other fixed location where she conducts substantial administrative or management activities. The fact that she conducts some administrative or management activities in her hotel room (not a fixed location) does not disqualify her home office from being her principal place of business. She meets all the qualifications, including principal place of business, so she can deduct expenses (to the extent of the deduction limit, explained later) for the business use of her home.
taxmap/pubs/p587-000.htm#en_us_publink100013742

Example 3.(p5)


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Paul is a self-employed anesthesiologist. He spends the majority of his time administering anesthesia and postoperative care in three local hospitals. One of the hospitals provides him with a small shared office where he could conduct administrative or management activities.
Paul very rarely uses the office the hospital provides. He uses a room in his home that he has converted to an office. He uses this room exclusively and regularly to conduct all the following activities.
  • Contacting patients, surgeons, and hospitals regarding scheduling.
  • Preparing for treatments and presentations.
  • Maintaining billing records and patient logs.
  • Satisfying continuing medical education requirements.
  • Reading medical journals and books.
Paul's home office qualifies as his principal place of business for deducting expenses for its use. He conducts administrative or management activities for his business as an anesthesiologist there and he has no other fixed location where he conducts substantial administrative or management activities for this business. His choice to use his home office instead of the one provided by the hospital does not disqualify his home office from being his principal place of business. His performance of substantial nonadministrative or nonmanagement activities at fixed locations outside his home also does not disqualify his home office from being his principal place of business. He meets all the qualifications, including principal place of business, so he can deduct expenses (to the extent of the deduction limit, explained later) for the business use of his home.
taxmap/pubs/p587-000.htm#en_us_publink100013743

Example 4.(p5)


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Kathleen is employed as a teacher. She is required to teach and meet with students at the school and to grade papers and tests. The school provides her with a small office where she can work on her lesson plans, grade papers and tests, and meet with parents and students. The school does not require her to work at home.
Kathleen prefers to use the office she has set up in her home and does not use the one provided by the school. She uses this home office exclusively and regularly for the administrative duties of her teaching job.
Kathleen must meet the convenience-of-the-employer test, even if her home qualifies as her principal place of business for deducting expenses for its use. Her employer provides her with an office and does not require her to work at home, so she does not meet the convenience- of-the-employer test and cannot claim a deduction for the business use of her home.
taxmap/pubs/p587-000.htm#en_us_publink100013744

More Than One Trade or Business(p5)


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The same home office can be the principal place of business for two or more separate business activities. Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. You must use the home office exclusively and regularly for one or more of the following purposes.
  • As the principal place of business for one or more of your trades or businesses.
  • As a place to meet or deal with patients, clients, or customers in the normal course of one or more of your trades or businesses.
  • If your home office is a separate structure, in connection with one or more of your trades or businesses.
You can use your home office for more than one business activity, but you cannot use it for any nonbusiness (personal) activities.
If you are an employee, any use of the home office in connection with your employment must be for the convenience of your employer. See Rental to employer, later if you rent part of your home to your employer.
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Example.(p6)

Tracy White is employed as a teacher. Her principal place of work is the school, which provides her office space to do her school work. She also has a mail order jewelry business. All her work in the jewelry business is done in her home office and the office is used exclusively for that business. If she meets all the other tests, she can deduct expenses for the business use of her home for the jewelry business.
If Tracy also uses the office for work related to her teaching, she must meet the exclusive use test for both businesses to qualify for the deduction. As an employee, Tracy must also meet the convenience-of-the-employer test to qualify for the deduction. She does not meet this test for her work as a teacher, so she cannot claim a deduction for the business use of her home for either activity.
taxmap/pubs/p587-000.htm#en_us_publink100013746

Place To Meet Patients, Clients, or Customers(p6)


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Place To Meet Patients, Clients, or Customers

If you meet or deal with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business if you meet both the following tests.
  • You physically meet with patients, clients, or customers on your premises.
  • Their use of your home is substantial and integral to the conduct of your business.
Doctors, dentists, attorneys, and other professionals who maintain offices in their homes generally will meet this requirement.
Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the business use of your home.
The part of your home you use exclusively and regularly to meet patients, clients, or customers does not have to be your principal place of business.
taxmap/pubs/p587-000.htm#en_us_publink100013747

Example.(p6)

June Quill, a self-employed attorney, works 3 days a week in her city office. She works 2 days a week in her home office used only for business. She regularly meets clients there. Her home office qualifies for a business deduction because she meets clients there in the normal course of her business.
taxmap/pubs/p587-000.htm#en_us_publink100013748

Separate Structure(p6)


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Separate Structure

You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or a place where you meet patients, clients, or customers.
taxmap/pubs/p587-000.htm#en_us_publink100013749

Example.(p6)

John Berry operates a floral shop in town. He grows the plants for his shop in a greenhouse behind his home. He uses the greenhouse exclusively and regularly in his business, so he can deduct the expenses for its use, subject to the deduction limit, explained later.
previous pagePrevious Page: Publication 583 - Starting a Business and Keeping Records - How To Get More Information
next pageNext Page: Publication 587 - Business Use of Your Home (Including Use by Day-Care Providers) - Figuring the Deduction
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication