Home office deduction for self employed | VK Consulting LLC
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So you are self employed, and use part of your home for business. If you use space regularly and exclusively to conduct business you can deduct certain expenses.   Starting 2013 tax year there are two ways of doing it: Simplified option where taxpayer takes $5 per sq foot all inclusive ( up to 300 sq feet)  or regular method -calculate a percentage of your rent or mortgage, utilities, insurance devoted  to your business use of the home.

Below is a comparison of both methods:

Simplified Option Regular Method
Deduction for home office use of a portion of a residence allowed only if that portion is exclusively used on a regular basis for business purposes Same
Allowable square footage of home use for business (not to exceed 300 square feet) Percentage of home used for business
Standard $5 per square foot used to determine home business deduction Actual expenses determined and records maintained
Home-related itemized deductions claimed in full on Schedule A Home-related itemized deductions apportioned between Schedule A and business schedule (Sch. C or Sch. F)
No depreciation deduction Depreciation deduction for portion of home used for business
No recapture of depreciation upon sale of home Recapture of depreciation on gain upon sale of home
Deduction cannot exceed gross income from business use of  home  less business expenses Same
Amount in excess of gross income limitation may not be carried over Amount in excess of gross income limitation may be carried over
Loss carryover from use of regular method in prior year may not be claimed Loss carryover from use of regular method in prior year may be claimed if gross income test is met in current year



If you owe a home, you should discuss with your tax professional if its beneficial for you to claim a home office deduction vs taking a full mortgage deduction on Schedule A.