The Small Business Tax Help Blog

Question: If you pay cash for a home – a percentage of which is used regularly for business, how can that be expensed?

From what I understand, there are Michigan tax laws allowing deductions for renters and lendees, but what about those responsible people who have chosen not to live their lives in debt? Are they just out of luck?

Answer: strict IRS rules for home office use – you have to use one separate room or area that is NEVER used for anything else – whatever the square footage of that area is, is what portion of rent/mortgage/ utilities, etc you can deduct prorated by the months in a year -ex -1500 sq ft house – one bedroom is your office 150 sq feet. first year-started using i in July. 150/1500 = 10% x 6mos/12mos (50%) = 5% home office use – 10% in following years. separate business phone line would help too. This is for federal tax returns – probably similar for state returns. Renters are eligible also – for federal tax deduction

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