Can you depreciate your residence

You don't just depreciate the cost of buying rental property. Money spent to improve the property is depreciated as well. An improvement is anything that enhances the value or usefulness of a property, restores it to new or like-new condition, or adapts it to a new use.

Routine repairs and maintenance are not considered improvements. Maintenance costs are deducted as expenses in the year you spend the money. For example, adding tar on a roof would be considered maintenance, while the replacement of an entire roof would be depreciated.

You start taking depreciation deductions not when you buy it but when you begin using the property to generate rental income. The IRS refers to this as putting the property "in service. Whether you have stock, bonds, ETFs, cryptocurrency, rental property income or other investments, TurboTax Premier is designed for you. Increase your tax knowledge and understanding all while doing your taxes. From stocks, cryptocurrency to rental income, TurboTax Premier helps you get your taxes done right.

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Learn to Be a Better Investor. Forgot Password. The U. Bureau of Labor Statistics reports that a sizable part of the workforce — 23 percent — did at least some of their work from home in If you own your home, you can take certain tax deductions that help reduce your tax liability each year.

Homeownership also carries additional benefits if you use part of your primary house for business purposes. One of these benefits is claiming your property for tax depreciation. You can claim a deduction for depreciation on your primary house for its business use if you own your home and if you meet the qualifications under IRS guidelines for business deductions. The IRS considers your primary residence to be the house where you live most of the time.

Primary residence depreciation is a tax deduction that helps you recoup the costs of normal wear and tear or deterioration of your property. But you can only claim depreciation on your primary residence for the area s that you exclusively use for business purposes. The qualified business uses share square feet. In addition to the portion that they do not share, Kristen and Lindsey can both claim 50 of the square feet or divide the square feet between them in any reasonable manner.

If divided evenly, Kristen could claim square feet using the simplified method and Lindsey could claim square feet. If you conduct more than one business qualifying for the deduction, you are limited to a maximum of square feet for all of the businesses. Allocate the actual square footage used up to the maximum of square feet among your qualified business uses in a reasonable manner.

However, do not allocate more square feet to a qualified business use than you actually use for that business. The simplified method does not apply to rental use.

A rental use that qualifies for the deduction must be figured using actual expenses. If the rental use and a qualified business use share the same area, you will have to allocate the actual area used between the two uses.

You cannot use the same area to figure a deduction for the qualified business use as you are using to figure the deduction for the rental use. Part-year use or area changes for simplified method only. If your qualified business use was for a portion of the year for example, a seasonal business, a business that begins during the year, or you moved during the year or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage.

You calculate the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by When determining the average monthly allowable square footage, you cannot take more than square feet into account for any 1 month. Additionally, if your qualified business use was less than 15 days in a month, you must use for that month. Andy files his federal income tax return on a calendar year basis.

On July 20, he began using square feet of his home for a qualified business use. He continued to use the square feet until the end of the year. Amy files her federal income tax return on a calendar year basis. On April 20, she began using square feet of her home for a qualified business use. On August 5, she expanded the area of her qualified use to square feet.

Amy continued to use the square feet until the end of the year. Donna files her federal income tax return on a calendar year basis. From January 1 through July 16 she used square feet of her home for a qualified business use.

On July 17, Donna moved to a new home and immediately began using square feet for the same qualified business use. While preparing her tax return, Donna decided to use the simplified method to deduct her qualified business use of the first home and files a Form to deduct her qualified business use of the second home. If you moved during the year, your average allowable square footage will generally be less than Your deduction for business use of the home is limited to an amount equal to the gross income derived from the qualified business use of the home reduced by the business deductions that are unrelated to the use of your home.

If the business deductions that are unrelated to the use of your home are greater than the gross income derived from the qualified business use of your home, then you cannot take a deduction for this qualified business use of your home.

These expenses relate to the business activity in the home, but not to the use of the home itself. You can still deduct business expenses that are unrelated to the use of the home. See Where To Deduct , later. Examples of business expenses that are unrelated to the use of the home are advertising, wages, supplies, dues, and depreciation for equipment. The reduced rate will equal the prescribed rate times a fraction.

The numerator of the fraction is the number of hours that the space was used during the year for daycare and the denominator is the total number of hours during the year that the space was available for all uses.

You can use the Daycare Facility Worksheet for simplified method , near the end of this publication, to help you figure the reduced rate. If you used at least square feet for daycare regularly and exclusively during the year, then you do not need to reduce the prescribed rate or complete the Daycare Facility Worksheet. If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for that part of your home even if you use the same space for nonbusiness purposes.

To qualify for this exception to the exclusive use rule, you must meet both of the following requirements. You must be in the trade or business of providing daycare for children, persons age 65 or older, or persons who are physically or mentally unable to care for themselves. You must have applied for, been granted, or be exempt from having a license, certification, registration, or approval as a daycare center or as a family or group daycare home under state law.

You do not meet this requirement if your application was rejected or your license or other authorization was revoked. If you elect to use the simplified method for your home, figure your deduction as described earlier in Using the Simplified Method under Figuring the Deduction. If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare, figure what part is used for daycare, as explained in Business Percentage , earlier, under Figuring the Deduction.

If you also use that part exclusively for daycare, deduct all the allocable expenses, subject to the deduction limit, as explained earlier. If the use of part of your home as a daycare facility is regular, but not exclusive, you must figure the percentage of time that part of your home is used for daycare. A room that is available for use throughout each business day and that you regularly use in your business is considered to be used for daycare throughout each business day.

You do not have to keep records to show the specific hours the area was used for business. You can use the area occasionally for personal reasons. However, a room you use only occasionally for business does not qualify for the deduction.

To find the percentage of time you actually use your home for business, compare the total time used for business to the total time that part of your home can be used for all purposes. You can compare the hours of business use in a week with the number of hours in a week Or, you can compare the hours of business use for the year with the number of hours in the year 8, in If you started or stopped using your home for daycare in , you must prorate the number of hours based on the number of days the home was available for daycare.

Mary Lake used her basement to operate a daycare business for children. She figures the business percentage of the basement as follows. Mary completes Form , Part I, figuring the percentage of her home used for business, including the percentage of time the basement was used. In Part II, Mary figures her deductible expenses. She uses the following information to complete Part II.

This figure is the same as the amount on line 29 of her Schedule C Form The expenses she paid for rent and utilities relate to her entire home. Therefore, she enters the amount paid for rent on line 19, column b , and the amount paid for utilities on line 21, column b. She shows the total of these expenses on line 23, column b. The painting is a direct expense.

This is less than her deduction limit line 15 , so she can deduct the entire amount. Assume the same facts as in Example 1 except that Mary also has another room that was available each business day for children to take naps in. Although she did not keep a record of the number of hours the room was actually used for naps, it was used for part of each business day. Since the room was available for business use during regular operating hours each business day and was used regularly in the business, it is considered used for daycare throughout each business day.

In figuring her expenses, In addition, Assume the same facts as in Example 1 except that Mary stopped using her home for a daycare facility on June 24, She used the basement for daycare an average of 12 hours a day, 5 days a week, but for only 25 weeks of the year.

During the other 12 hours a day, the family could still use the basement. She figures the percentage of time the basement was used for business as follows. If you provide food for your daycare recipients, do not include the expense as a cost of using your home for business. Claim it as a separate deduction on your Schedule C Form You can never deduct the cost of food consumed by you or your family. For more information on meals that meet these requirements, see Meals in chapter 2 of Pub.

If you deduct the actual cost of food for your daycare business, keep a separate record with receipts of your family's food costs. Reimbursements you receive from a sponsor under the Child and Adult Care Food Program of the Department of Agriculture are taxable only to the extent they exceed your expenses for food for eligible children.

If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C Form If your food expenses are greater than the reimbursements, show the difference as an expense in Part V of Schedule C Form Do not include payments or expenses for your own children if they are eligible for the program.

Standard meal and snack rates. If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to compute the deductible cost of meals and snacks provided to eligible children.

For these purposes:. A family daycare provider is a person engaged in the business of providing family daycare;. Family daycare is childcare provided to eligible children in the home of the family daycare provider.

The care must be non-medical, not involve a transfer of legal custody, and generally last less than 24 hours each day; and. Eligible children are minor children receiving family daycare in the home of the family daycare provider.

Eligible children do not include children who are full-time or part-time residents in the home where the childcare is provided or children whose parents or guardians are residents of the same home.

Eligible children do not include children who receive daycare services for personal reasons of the provider. For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child. You can compute the deductible cost of each meal and snack you actually purchased and served to an eligible child during the time period you provided family daycare using the standard meal and snack rates shown in Table 3. You can use the standard meal and snack rates for a maximum of one breakfast, one lunch, one dinner, and three snacks per eligible child per day.

If you receive reimbursement for a particular meal or snack, you can deduct only the portion of the applicable standard meal or snack rate that is more than the amount of the reimbursement. You can use either the standard meal and snack rates or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year.

If you choose to use the standard meal and snack rates for a particular tax year, you must use the rates for all your deductible food costs for eligible children during that tax year.

However, if you use the standard meal and snack rates in any tax year, you can use actual costs to compute the deductible cost of food in any other tax year. If you use the standard meal and snack rates, you must maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children.

The records kept should include the name of each child, dates and hours of attendance in the daycare, and the type and quantity of meals and snacks served. This information can be recorded in a log similar to the one shown in Exhibit A , near the end of this publication.

The standard meal and snack rates include beverages, but do not include non-food supplies used for food preparation, service, or storage, such as containers, paper products, or utensils.

These expenses can be claimed as a separate deduction on your Schedule C Form In most cases, you must meet the ownership and use tests. However, even if you meet the ownership and use tests, your home sale is not eligible for the exclusion if either of the following is true. The ownership and use tests generally require that during the 5-year period ending on the date of the sale:. You lived in the home as your main home for at least 2 years use test.

The 2 years of residence can fall anywhere within the 5-year period, and it does not need to be a single block of time. If you use property partly as a home and partly for business, the treatment of any gain on the sale varies depending on whether the part of the property used for business is part of your home or separate from it. If the part of your property used for business is within your home, such as a room used as a home office for a business or rooms used to provide daycare, you do not need to allocate gain on the sale of the property between the business part of the property and the part used as a home.

In addition, you do not need to report the sale of the business part on Form , Sales of Business Property. This is true whether or not you were entitled to claim any depreciation. However, you cannot exclude the part of any gain equal to any depreciation allowed or allowable after May 6, See Depreciation , later. You may have used part of your property as a home and a separate part of it, such as an outbuilding, for business. You cannot exclude gain on the separate part of your property used for business unless you owned and lived in that part of your property for at least 2 years during the 5-year period ending on the date of the sale.

If you do not meet the use test for the business part of the property, an allocation of the gain on the sale is required. For this purpose, you must allocate the basis of the property and the amount realized upon its sale between the business part and the part used as a home.

You must report the sale of the business part on Form If you used a separate part of your property for business in the year of sale, you should treat the sale of the property as the sale of two properties, even if you met the use test for the business part. To determine the amount to report on Form , you must divide your selling price, selling expenses, and basis between the part of the property used for business and the separate part used as your home.

In the same way, if you qualify to exclude any of the gain on the business part of your property, also divide your maximum exclusion between that part of the property and the separate part used as your home. You can generally exclude gain on the part of your property used for business if you owned and lived in that part as your main home for at least 2 years during the 5-year period ending on the date of the sale. Use test met for business part no business use in year of sale.

If you have used a separate part of your property for business though not in the year of sale but meet the use test for both the business part and the part you use as a home, you do not need to treat the transaction as the sale of two properties. Also, you do not need to file Form You can generally exclude gain on the entire property.

If you were entitled to deduct depreciation on the part of your home used for business, you cannot exclude the part of the gain equal to any depreciation you deducted or could have deducted for periods after May 6, This means that when figuring the amount of gain you can exclude, you must reduce the total gain by any depreciation allowed or allowable on the part of your home used for business after May 6, If you can show by adequate records or other evidence that the depreciation you actually deducted the allowed depreciation was less than the amount you were entitled to deduct the allowable depreciation , the amount you cannot exclude and must subtract from your total gain when figuring your exclusion is the amount you actually deducted.

You do not have to reduce the gain by any depreciation you deducted or could have deducted for a separate structure for which you cannot exclude the allocable portion of the gain. If you used any part of your home for business, you must adjust the basis of your home for any depreciation that was allowable for its business use, even if you did not claim it. If you deducted less depreciation than you could have under the method you properly selected, you must decrease the basis by the amount you could have deducted under that method.

If you deducted more depreciation than you should have under the method you properly selected, you must decrease the basis by the amount you should have deducted, plus the part of the excess deducted that actually decreased your tax liability for any year. For more information on reducing the basis of your property for depreciation, see Pub. A loss from the sale of your home, or the personal part of your home if it was also used for business or to produce rental income, is not deductible.

If any of these conditions apply, report the gain or loss as explained in the Instructions for Schedule D. If you used the home for business, you may have to use Form to report the sale of the business part. See the Instructions for Form This section covers only the basic rules for the sale or exchange of your home. For more information, see Pub. This section discusses the depreciation and section deductions you may be entitled to take for furniture and equipment you use in your home for business.

These deductions are available whether or not you qualify to deduct expenses for the business use of your home. If you use certain types of property, called listed property, in your home, special rules apply. Listed property includes any property of a type generally used for entertainment, recreation, and amusement including photographic, phonographic, and video recording equipment. For more information on ADS, see Pub. You must allocate the use of any item of listed property used for more than one purpose during the year among its various uses.

However, you do use the combined total of business and investment use to figure your depreciation deduction for the property. Figure any excess depreciation include any section deduction on the property in figuring excess depreciation and add it to:. If you use listed property in your business, you must file Form to claim a depreciation or section deduction.

Begin with Part V, Section A, of that form. For more information on what records to keep, see Pub. If you bought certain property during to use in your business, you can do any one of the following subject to the limits discussed later.

You can claim the section deduction for the cost of depreciable tangible personal property bought for use in your trade or business. You can choose how much subject to the limit of the cost you want to deduct under section and how much you want to depreciate. You can spread the section deduction over several items of property in any way you choose as long as the total does not exceed the maximum allowable.

You cannot take a section deduction for the basis of the business part of your home. For more information on the section deduction, qualifying property, the dollar limit, and the business income limit, see Pub.

Do not include any costs deducted in Part I section deduction. Most business property normally used in a home office is either 5-year or 7-year property under MACRS. Under MACRS, you generally use the half-year convention, which allows you to deduct a half-year of depreciation in the first year you use the property in your business.

After you have determined the cost of the depreciable property minus any section deduction and special depreciation allowance taken on the property and whether it is 5-year or 7-year property, use the table, shown next, to figure your depreciation if the half-year convention applies.

Table 4. In June , Donald Kent bought a desk and three chairs for use in his office. Donald can elect to do one of the following. Donald does not take a section deduction. If you use property in your home office that was used previously for personal purposes, you cannot take a section deduction for the property. You also cannot take a special depreciation allowance for the property.

However, you can depreciate it. The method of depreciation you use depends on when you first used the property for personal purposes. If you began using the property for personal purposes after and change it to business use in , depreciate the property under MACRS. The basis for depreciation of property changed from personal to business use is the lesser of the following. If you began using the property for personal purposes after and before and change it to business use in , you generally depreciate the property under the accelerated cost recovery system ACRS.

If you began using the property for personal purposes before and change it to business use in , depreciate the property by the straight line or declining balance method based on salvage value and useful life. You do not have to use a particular method of recordkeeping, but you must keep records that provide the information needed to figure your deductions for the business use of your home.

You should keep canceled checks, receipts, and other evidence of expenses you paid. That you use part of your home exclusively and regularly for business as either your principal place of business or as the place where you meet or deal with clients or customers in the normal course of your business. Keep records to prove your home's depreciable basis. This includes records of when and how you acquired your home, your original purchase price, any improvements to your home, and any depreciation you are allowed because you maintained an office in your home.

For more information on recordkeeping, see Pub. Deduct expenses for the business use of your home on Form or Form SR. Where you deduct these expenses on the form depends on whether you are a self-employed person or a partner. If you use your home in your trade or business and file Schedule C Form , report the entire deduction for business use of your home on line 30 of Schedule C Form Whether you need to complete and attach Form to your return depends on how you figure your deduction.

See Line 30 in the Instructions for Schedule C for more information. If you use your home in your farming business and file Schedule F Form , report your entire deduction for business use of the home on line 32 of Schedule F Form Enter "Business Use of Home" on the dotted line beside the entry.

Certain expenses related to the use of your home may be deducted whether or not you use your home for business. These expenses may include some or all of your mortgage interest, mortgage insurance premiums, real estate taxes, and casualty losses attributable to a federally declared disaster.

Where you deduct these expenses depends on how you figure your deduction for business use of the home. In general, you will deduct the business portion of these expenses on Schedule C Form or Schedule F Form as part of your deduction for business use of your home. If you itemize your deductions, you will deduct the personal portion of these expenses on Schedule A Form The business portion of your home mortgage interest allowed as a deduction this year will be included in the business use of the home deduction you report on Schedule C Form , line 30, or Schedule F Form , line If you cannot deduct the business portion of your home mortgage interest in full this year, you will carry over the remaining home mortgage interest to a subsequent year in which you use actual expenses to figure your business of the home deduction.

If you itemize your deductions on Schedule A Form , only include the personal part of your deductible mortgage interest on Schedule A Form , line 8a or 8b. The personal portion of your home mortgage interest will generally be the amount of deductible home mortgage interest you figured when treating all home mortgage interest as a personal expense and applying the Schedule A Form limits on deducting home mortgage interest, reduced by the business or rental portions deducted or carried over as a business or rental expense on Schedule C, E, or F, or any form other than Schedule A.

Home mortgage interest that exceeds the amount you figured after applying the Schedule A Form limits on deducting home mortgage interest is not deductible as a personal expense.

The business portion of your mortgage insurance premiums allowed as a deduction this year will be included in the business use of the home deduction you report on Schedule C Form , line 30, or Schedule F Form , line If you cannot deduct the business portion of your mortgage insurance premiums in full this year, you will carry over the remaining mortgage insurance premiums to a subsequent year in which you use actual expenses to figure your business of the home deduction.

If you itemize your deductions on Schedule A Form , only include the personal part of your mortgage insurance premiums in line 1 of the Mortgage Insurance Premiums Worksheet in the Instructions for Schedule A. The personal portion of your mortgage insurance premiums does not include the rental portion or business portion of mortgage insurance premiums attributable to the home in which you conducted rental or business activities. The business portion of your real estate taxes allowed as a deduction this year will be included in the business use of the home deduction you report on Schedule C Form , line 30, or Schedule F Form , line If you cannot deduct the business portion of your real estate taxes in full this year, you will carry over those real estate taxes to a subsequent year in which you use actual expenses to figure your business of the home deduction.

If you itemize your deductions on Schedule A Form , only include the personal part of your real estate taxes on Schedule A Form , line 5b. The personal portion of your real estate taxes will generally be the amount of real estate taxes you paid for the home reduced by the business or rental portions deducted or carried over as a business or rental expense on Schedule C, E, or F, or any form other than Schedule A.

The business portion of your casualty losses allowed as a deduction this year will be reported on line 27 in Section B of Form If you cannot deduct the business portion of your casualty losses in full this year, you will carry over those losses to a subsequent year in which you use actual expenses to figure your business of the home deduction. Only include the personal portion of your casualty losses in Section A of the Form you attach to your return.

If you itemize your deductions on Schedule A Form , you will include the deductible personal portion of the casualty losses attributable to your home figured on line 18 of Form on line 15 of Schedule A and the net qualified disaster losses attributable to your home figured on line 15 of Form on line 16 of Schedule A.

If you are increasing your standard deduction by a net qualified disaster loss, you will add the net qualified disaster loss figured on line 15 of Form to your standard deduction using a Schedule A. If you use the simplified method to figure your deduction for the business use of a home, your mortgage interest, mortgage insurance premiums, real estate taxes, and casualty losses are treated as personal expenses, and they are subject to any limits that apply to deducting personal expenses.

No part of any of these expenses can be deducted as a business expense on Schedule C Form or Schedule F Form Generally, you can only deduct these expenses if you itemize your deductions on Schedule A Form Other expenses related to the use of your home may be deducted only to the extent they are related to the business use of your home.

These expenses include insurance, maintenance, utilities, and depreciation of your home. You cannot deduct the personal portion of any of these expenses. Where you deduct the business portion of these expenses depends on how you figure your deduction for business use of the home.

If you file Schedule C Form , report the other home expenses that would not be allowable if you did not use your home for business for example, insurance, maintenance, utilities, and depreciation on the appropriate lines of your Form If you rent rather than own your home, report the rent you paid on line 19 of Form If these expenses exceed the deduction limit, carry the excess over to next year.

The carryover will be subject to next year's deduction limit. If you file Schedule F Form , include your otherwise nondeductible expenses insurance, maintenance, utilities, depreciation, etc.

If these expenses exceed the deduction limit, carry the excess over to the next year. You cannot deduct any of these expenses.

The simplified method is an alternative to calculating and substantiating these expenses. Figure your deduction using the Simplified Method Worksheet. No matter how you figure the deduction for business use of your home, deduct business expenses that are not for the use of your home itself dues, salaries, supplies, certain telephone expenses, depreciation of equipment, etc. These expenses are not for the use of your home, so they are not subject to the deduction limit for business use of the home expenses.

You may be allowed to deduct unreimbursed ordinary and necessary expenses you paid on behalf of the partnership including qualified expenses for the business use of your home if you were required to pay these expenses under the partnership agreement and they are trade or business expenses under section If you are using actual expenses to figure your deduction for the business use of your home, use the Worksheet To Figure the Deduction for Business Use of Your Home , later.

If you are using the simplified method to figure your deduction for the business use of your home, use the Simplified Method Worksheet , later. See the following forms and related instructions for information about deducting unreimbursed partnership expenses. For more information about partners and partnerships, see Pub. This worksheet is to be used by taxpayers filing Schedule F Form or by partners with certain unreimbursed ordinary and necessary expenses if using actual expenses to figure the deduction.

If you are using the simplified method to figure your deduction, use the Simplified Method Worksheet , later. Use this worksheet if you file Schedule F Form or you are a partner, and you are using actual expenses to figure your deduction for business use of the home.

Use a separate worksheet for each qualified business use of your home. The Worksheet To Figure the Deduction for Business Use of Your Home is to be used by taxpayers filing Schedule F Form or by partners with certain unreimbursed ordinary and necessary expenses if using actual expenses to figure the deduction.

The following instructions explain how to complete each part of the worksheet. See Partners under Where To Deduct , earlier, before completing the worksheet. If you file Schedule C Form and use actual expenses to figure your deduction, use Form instead of this worksheet.

If you figure the percentage based on area, use lines 1 through 3 to figure the business-use percentage. Enter the percentage on line 3. You can use any other reasonable method that accurately reflects your business-use percentage.

If you operate a daycare facility and you meet the exception to the exclusive use test for part or all of the area you use for business, you must figure the business-use percentage for that area as explained under Daycare Facility , earlier. If you use another method to figure your business percentage, skip lines 1 and 2 and enter the percentage on line 3. If you file Schedule F Form , enter your total gross income that is related to the business use of your home.

This would generally be the amount on line 9 of Schedule F Form Use lines 5, 6, and 7 for business use of the home expenses that would have been deductible as a personal expense if you had not used your home for business.

These expenses include certain casualty losses, mortgage interest, mortgage insurance premiums, and real estate taxes. If you claim the standard deduction, you will not include any mortgage interest, mortgage insurance premiums, or real estate taxes on lines 6 and 7; instead, you will claim the entire business use of the home portion of those expenses using lines 14 and If you are not increasing your standard deduction by a net qualified disaster loss, then you will not include any casualty losses on line 5; instead, you will claim the entire business use of the home portion of your casualty losses on line If you are filing Schedule A to increase your standard deduction by a net qualified disaster loss, see Casualty losses reported on line 5 , later.

You may prefer to itemize your deductions on Schedule A to claim amounts on lines 5, 6, and 7, even if your total personal deductions are less than the standard deduction. Step 1. Complete a worksheet version of Section A of Form treating all your casualty losses and gains as personal expenses. Do not file this worksheet version of Form ; instead, keep it for your records. You will complete a separate Form to attach to your return using only the personal portion of your casualty losses and gains for Section A.

Step 2. Include in column b of line 5 the loss amounts from lines 15 and 18 of this worksheet version of Form that are attributable to the home in which you conducted the business and are the result of a federally declared disaster.

If you are claiming an increased standard deduction instead of itemizing your deductions, only use a net qualified disaster loss on line 15 of the worksheet version of Form for this Step 2.

See the instructions for line 33, later, for the business use of the home casualty losses that you must include in Section B of the separate Form you attach to your return. Use only the personal portion of your casualty losses and gains when completing Section A of the separate Form you attach to your return. The separate Form you attach to your return is used to figure the casualty losses you can include on line 15 of Schedule A and the net qualified disaster losses you can include on line 16 of Schedule A.

See the instructions for line 27, later, to deduct the part of your casualty losses for business use of your home not allowed because of the limits on deducting casualty losses as a personal expense, including any losses that are not the result of a federally declared disaster. If you are claiming the standard deduction, do not report an amount on line 6.

If you itemize your deductions, figure the amount to include in column b of line 6 as follows. Treat all the mortgage interest you paid as a personal expense and figure the amount that would be deductible as an itemized deduction on Schedule A. Include in column b of line 6 the amount of deductible mortgage interest figured in Step 1 that is attributable to the home in which you conducted the business.

Because the limits on deducting mortgage interest as a personal expense are figured using all loans secured by your home s , do not claim mortgage interest in column a as a direct expense, even if you use a separate structure in your home in connection with your trade or business. When you figure your itemized deduction for mortgage interest on Schedule A, include the following amounts of deductible mortgage interest that you figured in Step 1 to the extent they are not deducted on another form, such as Schedule E as a rental expense.

The amount of deductible mortgage interest you figured in Step 1 that is not attributable to the home in which you conducted the business. The personal portion of deductible mortgage interest you included in column b of line 6. See the instructions for line 14, later, to deduct the part of your mortgage interest from loans used to buy, build, or substantially improve the home in which you conducted business that is not allowed on line 6 because of the limits on deducting home mortgage interest as a personal expense.

If you are claiming the standard deduction, do not report any mortgage insurance premiums on line 6. Treat all the mortgage insurance premiums you paid under a mortgage insurance contract issued after December 31, , in connection with home acquisition debt that was secured by your first or second home as a personal expense and complete a separate Mortgage Insurance Premiums Deduction Worksheet in the Instructions for Schedule A for the Worksheet To Figure the Deduction for Business Use of Your Home.

When completing line 2 of this worksheet for the Worksheet To Figure the Deduction for Business Use of Your Home, enter your adjusted gross income excluding the gross income and deductions attributable to the business use of the home.

Do not use this worksheet to figure the amount to enter on line 8d of Schedule A. Include in column b of line 6 the amount of deductible mortgage insurance premiums figured in Step 1 that are attributable to the home in which you conducted the business. When you figure your itemized deduction for mortgage insurance premiums on Schedule A, use only the personal portion of your mortgage insurance premiums when completing the Mortgage Insurance Premiums Deduction Worksheet for line 8d of Schedule A.

The personal portion of your mortgage insurance premiums for Schedule A include the following amounts to the extent they are not deducted on another form, such as Schedule E as a rental expense. The mortgage insurance premiums that are not attributable to the home in which you conducted the business. The personal portion of the mortgage insurance premiums attributable to the home in which you conducted the business.

See the instructions for line 14, later, to deduct the part of your mortgage insurance premiums from loans used to buy, build, or substantially improve the home in which you conducted business that are not allowed on line 6 because of the limit on deducting mortgage insurance premiums as a personal expense.

If you are claiming the standard deduction, do not report an amount on line 7. If you are itemizing deductions, figure the amount to include on line 7 as follows. If you do not meet the condition of Step 1, use the following worksheet to figure the amount to include in column a of line 7. When you figure your itemized deduction for state and local taxes on Schedule A, only include the personal portion of your real estate taxes on line 5b of Schedule A. See the instructions for line 15, later, to deduct the part of your real estate taxes for the home in which you conducted business that is not allowed on line 7 because of the limitation on deducting state and local taxes as a personal expense.

Multiply your total indirect expenses line 8, column b by the business percentage from line 3. Enter the result on line 9. Add this amount to the total direct expenses line 8, column a and enter the total on line Enter any other business expenses that are not attributable to business use of the home on line Farmers should generally enter their total farm expenses before deducting office-in-the-home expenses.

Do not enter the deductible part of your self-employment tax. Add the amounts on lines 10 and 11, and enter the total on line Subtract line 12 from line 4, and enter the result on line This is your deduction limit. You use it to determine whether you can deduct any of your other expenses for business use of the home this year.

If you cannot, you will carry them over to the next year in which you use actual expenses to figure the deduction. If line 13 is zero or less, enter