Home Office Expenses: Direct, Indirect, and Unrelated

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Why YOU Should Care:

If you maintain a home office and spend money to repair or maintain your house, you need to divide the related expenses between personal and business. Only the expenses that relate to the business portion of your home – your home office – can be included on your Form 8829.

Direct Expenses, Indirect Expenses, and Unrelated Expenses

There are three types of expenses you may incur while maintaining a home and home office; direct, indirect, and unrelated.

Direct expenses are those that directly impact the office portion of your home. For example, repairing  the drywall in your office space or installing carpet. These expenses relate solely to the office portion of your home and are deductible in full.

Indirect expenses impact the whole home. While they benefit the home office as it is part of the home, they do not correspond directly to maintaining a home office. Getting a new roof on the house, for example, would prevent leaks in the office, but also prevent leaks in the personal areas of the home. These indirect expenses must be divided between the business and personal percentages of your home. The business percentage of these expenses is deductible.

Unrelated expenses are those that you incur as a homeowner but that do not relate to maintaining a home office. Examples would be lawn care or constructing a carport. These expenses do not impact the home office and are not deductible.