Home Office Deduction: Simplified vs. Actual Method

For many Realtors, the home office isn’t just where the day starts — it’s the business’s command center. The IRS allows two ways to deduct home office expenses, but choosing the right one can make a big difference.

Simplified Method:

• $5 per square foot, up to 300 square feet.

• No tracking individual bills or repairs.

Actual Expense Method:

• Deduct a percentage of actual home expenses like mortgage interest, utilities, property tax, and insurance based on the office’s square footage.

• Requires detailed recordkeeping.

When It Matters: If your home office is large or costs are high, the actual method usually yields a bigger deduction. But if simplicity wins, use the flat rate.

💡 Key Takeaway: Choose accuracy over ease when expenses are high; use simplicity when documentation time outweighs savings.

⚠️ This blog is for informational purposes only and does not constitute tax, legal, or accounting advice. Please consult your CPA for guidance specific to your situation.