Saturday, May 23, 2009

Home Office Regular Use

June,

Thank you so much for your eLetter Ways Through the Maze.

Your book has been very helpful. What a blessing. I was reading the section in the book on home business deduction. Under rule #2, Used on a regular basis. What do they consider regular?

I'm asking cause last year I had to leave town on family emergency for a month. Additionally, I do consulting in IT. So, sometimes business is slow, other times busy. But even in slow times, we still have to do administrative tasks, including remote support of clients, maintenance, dealing with issues as they transpire.

Thanks for you perspective on this,
-Adam


Hello Adam,

Thanks for letting me know that my writing is helpful to you.

Sounds to me as if you have a home office. An emergency leave of absence from your home office does not disqualify your deduction; nor does any occasional voluntary leave of absence disqualify the deduction. And if once in a while you leave the office to work wireless by the pool in order to keep an eye on the kids, that doesn't disqualify the home office either.

On the other hand, occasional use does not qualify it as a home office. Here's an example from my book:
Allmost Sargent has a rented studio in town. He also has great light in a back room of his house. The room is always locked and seldom used. Once in a while he brings a potential buyer to his home to look at a painting and he uses the back room for the viewing. This is not regular use and so he cannot deduct the use of that room as a business expense.

Although you didn't ask, just let me mention: were Uncle Sydney to sleep on your home office sofa during his occasional pass through town that would disqualify the room as a home office deduction.

Best,
June

3 comments:

Tim said...

Thank you so much for your advice for us through your book and blog; it really helps make sense of all of this.

This post clarifies rule #2, but I'm wondering how it's looked at if the business is only part time, say a few hours a week, assuming you pass the business/hobby test.

I'm also wondering how it dovetails with rule #1 about exclusivity and #3 about principal place of business. In my case I'm setting up a portion of a room exclusively for business books, files, and equipment, but it amounts to a tiny fraction of the house. Nearly all business work (administrative and creative) is done at home, but in areas of the house which are not exclusive-- I can't get away from a shared desk scenario. Can a 0.5% exclusive space that is accessed several times a week for reference and filing qualify as a home office, while the other many long hours are worked elsewhere in the house?

Tim said...

Follow up to my comment on this post:

After re-reading some of the other posts in your blog, I think my question could be better summed up as "are there specific uses which qualify or are required in order to qualify an area of the home as an office?" In my case, is reference and filing in the small exclusive area enough to also meet the regular use and primary purpose tests?

Thanks so much for your insight!

June Walker said...

Hi Tim,

So happy to help you make sense of all this.

As long as you use the space regularly it doesn't matter how small the space nor how many hours per week you use it.

Exclusive use simply means that no personal activities take place in the home office area.

So, it looks as if you're OK with a home office deduction even thought it's a small space for a short amount of time.

Best,
June