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Home Office Deductions: Hoops To Jump Through

Individuals who work full-time or part of the time at home can take home office deductions for a part of the residence expenses - and for depreciation, if they are owners. Deductions have been allowed in the past for constricted or out-of-the-way spaces, such as the desk area in the corner or the basement storage area for business records.

One condition though for the deduction to be valid is that the space must be "exclusively used on a regular basis" in the taxpayer’s business. Recently, a clinical psychologist who worked part of the time at home failed the "exclusively" test. Her 400 square foot San Francisco apartment was, in effect, too small for her practice area to be exclusively used in her practice. As the Tax Court put it: "Given the size and layout of [her] apartment, we fail to see how any portion of it could have been used ‘exclusively’ for business purposes." The Tax Court, as a result, denied the deduction.

For further information, contact James J. Holtzman, CPA at (412) 635-9210 or

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