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Future Developments
Publication 587

Business Use
of Your Home
(Including Use by
Daycare Providers)
For use in preparing

2025 Returns

For the latest information about developments related to
Pub. 587, such as legislation enacted after it was
published, go to IRS.gov/Pub587.

What’s New
State and local tax deduction limit increased. The
overall limit on the deduction for state and local income,
sales, and property taxes has increased to $40,000
($20,000 if married filing separately). The overall limit is
reduced if your modified adjusted gross income is more
than $500,000 ($250,000 if married filing separately) but
will not be reduced below $10,000 ($5,000 if married filing
separately).
Standard meal and snack rates applicable to United
States territories. The standard meal and snack rate table provides the deductible costs for meals provided by
family daycare providers. These amounts apply to U.S.
territories (Guam, Puerto Rico, and the U.S. Virgin Islands) as well as to U.S. states. See Table 3, Standard
Meal and Snack Rates, below.

Reminders
Simplified method for business use of home deduction. The IRS provides a simplified method to figure your
expenses for business use of your home. For more information, see Using the Simplified Method under Figuring
the Deduction, later.
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs
and
calling
1-800-THE-LOST
(1-800-843-5678) if you recognize a child.

Introduction

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Feb 27, 2026

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The purpose of this publication is to provide information
on figuring and claiming the deduction for business use of
your home. The term “home” includes a house, apartment,
condominium, mobile home, boat, or similar property that
provides basic living accommodations. It also includes
structures on the property, such as an unattached garage,
studio, barn, or greenhouse. However, it does not include
any part of your property used exclusively as a hotel, motel, inn, or similar establishment.
Qualifying for a Deduction explains the requirements for
qualifying to deduct expenses for the business use of your

Publication 587 (2025) Catalog Number 15154T
Department of the Treasury Internal Revenue Service www.irs.gov

home (including special rules for storing inventory or product samples). For special rules that apply to daycare providers, see Daycare Facility.
After you determine that you qualify for the deduction,
Figuring the Deduction explains the expenses you can deduct using either your actual expenses or the simplified
method. The simplified method is an alternative to calculating and substantiating actual expenses.
Where To Deduct explains where a self-employed person or partner will report the deduction.
This publication also includes information on the following.

• Selling a home that was used partly for business.
• Deducting expenses for furniture and equipment used
in your business.

• Records you should keep.
Finally, this publication contains worksheets to help you
figure the amount of your deduction if you use your home
in your farming business and you are filing Schedule F
(Form 1040) or you are a partner and the use of your
home resulted in unreimbursed ordinary and necessary
expenses that are trade or business expenses under section 162 and that you are required to pay under the partnership agreement. If you used your home for business
and you are filing Schedule C (Form 1040), you will use either Form 8829 or the Simplified Method Worksheet in
your Instructions for Schedule C.
The rules in this publication apply to individuals.
If you need information on deductions for renting out
your property, see Pub. 527, Residential Rental Property
(Including Rental of Vacation Homes).
Comments and suggestions. We welcome your comments about this publication and suggestions for future
editions.
You can send us comments through IRS.gov/
FormComments. Or, you can write to the Internal Revenue
Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each comment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above address.
Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
2

your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.

Useful Items

You may want to see:
Publication
523 Selling Your Home
523

551 Basis of Assets
551

583 Starting a Business and Keeping Records
583

946 How To Depreciate Property
946

Form (and Instructions)
Schedule C (Form 1040) Profit or Loss From
Business
Schedule C (Form 1040)

4562 Depreciation and Amortization
4562

8829 Expenses for Business Use of Your Home
8829

Qualifying for a Deduction
Generally, you cannot deduct items related to your home,
such as mortgage interest, real estate taxes, utilities,
maintenance, rent, depreciation, or property insurance, as
business expenses. However, you may be able to deduct
expenses related to the business use of part of your home
if you meet specific requirements. Even then, the deductible amount of these types of expenses may be limited.
Use this section and Figure A to decide if you can deduct
expenses for the business use of your home.
To qualify to deduct expenses for business use of your
home, you must use part of your home:

• Exclusively and regularly as your principal place of
business (see Principal Place of Business, later);

• Exclusively and regularly as a place where you meet

or deal with patients, clients, or customers in the normal course of your trade or business;

• In the case of a separate structure that is not attached
to your home, in connection with your trade or business;

• On a regular basis for certain storage use (see Storage of inventory or product samples, later);

• For rental use (see Pub. 527); or
• As a daycare facility (see Daycare Facility, later).

Exclusive Use
To qualify under the exclusive use test, you must use a
specific area of your home only for your trade or business.
The area used for business can be a room or other separately identifiable space. The space does not need to be
marked off by a permanent partition.
Publication 587 (2025)

You do not meet the requirements of the exclusive use
test if you use the area in question both for business and
for personal purposes.
Example. You are an attorney and use a den in your
home to write legal briefs and prepare clients’ tax returns.
Your family also uses the den for recreation. The den is
not used exclusively in your trade or business, so you cannot claim a deduction for the business use of the den.

Exceptions to Exclusive Use
You do not have to meet the exclusive use test if either of
the following applies.

• You use the part of your home in question for the stor-

age of inventory or product samples (discussed next).

• You use the part of your home in question as a day-

care facility (discussed later under Daycare Facility).

Note: With the exception of these two uses, any portion of the home used for business purposes must meet
the exclusive use test.
Storage of inventory or product samples. If you use
part of your home for storage of inventory or product samples, you can deduct expenses for the business use of
your home without meeting the exclusive use test. However, you must meet all the following tests.

• You sell products at wholesale or retail as your trade or
business.

• You keep the inventory or product samples in your
home for use in your trade or business.

• Your home is the only fixed location of your trade or
business.

• You use the storage space on a regular basis.
• The space you use is a separately identifiable space
suitable for storage.

Example. Your home is the only fixed location of your
business of selling mechanics’ tools at retail. You regularly
use half of your basement for storage of inventory and
product samples. You sometimes use the area for personal purposes. The expenses for the storage space are
deductible even though you do not use this part of your
basement exclusively for business.

Regular Use
To qualify under the regular use test, you must use a specific area of your home for business on a regular basis. Incidental or occasional business use is not regular use. You
must consider all facts and circumstances in determining
whether your use is on a regular basis.

Trade or Business Use
To qualify under the trade-or-business-use test, you must
use part of your home in connection with a trade or business. If you use your home for a profit-seeking activity that
Publication 587 (2025)

is not a trade or business, you cannot take a deduction for
its business use.
Example. You use part of your home exclusively and
regularly to read financial periodicals and reports, clip
bond coupons, and carry out similar activities related to
your own investments. You do not make investments as a
broker or dealer. So, your activities are not part of a trade
or business and you cannot take a deduction for the business use of your home.

Principal Place of Business
You can have more than one business location, including
your home, for a single trade or business. To qualify to deduct the expenses for the business use of your home under the principal place of business test, your home must
be your principal place of business for that trade or business. To determine whether your home is your principal
place of business, you must consider:

• The relative importance of the activities performed at
each place where you conduct business, and

• The amount of time spent at each place where you
conduct business.

Your home office will qualify as your principal place of
business if you meet the following requirements.

• You use it exclusively and regularly for administrative
or management activities of your trade or business.

• You have no other fixed location where you conduct

substantial administrative or management activities of
your trade or business.

If, after considering your business locations, your home
cannot be identified as your principal place of business,
you cannot deduct home office expenses. However, see
the later discussions under Place To Meet Patients, Clients, or Customers and Separate Structure for other ways
to qualify to deduct home office expenses.
Administrative or management activities. There are
many activities that are administrative or managerial in nature. The following are a few examples.

• Billing customers, clients, or patients.
• Keeping books and records.
• Ordering supplies.
• Setting up appointments.
• Forwarding orders or writing reports.
Administrative or management activities performed
at other locations. The following activities performed by
you or others will not disqualify your home office from being your principal place of business.

• You have others conduct your administrative or man-

agement activities at locations other than your home.
(For example, another company does your billing from
its place of business.)

3

• You conduct administrative or management activities

side your home. (For example, you meet with or provide services to customers, clients, or patients at a
fixed location of the business outside your home.)

at places that are not fixed locations of your business,
such as in a car or a hotel room.

• You occasionally conduct minimal administrative or

• You have suitable space to conduct administrative or

management activities at a fixed location outside your
home.

management activities outside your home, but choose
to use your home office for those activities instead.

• You conduct substantial nonadministrative or nonmanagement business activities at a fixed location out-

Figure A. Can You Deduct Business Use of the Home Expenses? Do not use this chart if you use your home for the storage of
inventory or product samples, or to operate a daycare facility. See Exceptions to Exclusive Use, earlier, and Daycare Facility, later.
Start Here:

No

Is part of your home
used in connection with
a trade or business?
Yes

Yes

Are you using the part of
your home as an employee?
No

No

Is the use regular
and exclusive?
Yes
Is it your principal place
of business?

Yes

No
Do you meet patients,
clients, or customers in
your home?

Yes

No

No deduction

No

Is it a separate
structure?

Example 1. Sid is a self-employed plumber. Most of
Sid’s time is spent at customers’ homes and offices installing and repairing plumbing. Sid has a small office at
home that is used exclusively and regularly for the administrative or management activities of the plumbing business, such as phoning customers, ordering supplies, and
keeping the books.
Sid writes up estimates and records of work completed
at the customers’ premises. Sid does not conduct any
substantial administrative or management activities at any
fixed location other than their home office. Sid does not do
4

Yes

Deduction allowed

direct billing. Sid uses a local bookkeeping service to bill
customers.
Sid’s home office qualifies as a principal place of business for deducting expenses. Sid uses the home office for
the administrative or managerial activities of the plumbing
business and has no other fixed location where these administrative or managerial activities are conducted. Sid’s
choice to have billing done by another company does not
disqualify the home office from being their principal place
of business. Sid meets all the qualifications, including
principal place of business, so the expenses (subject to
certain limitations, explained later) can be deducted for
the business use of the home.
Publication 587 (2025)

Example 2. Alex is a self-employed sales representative for several different product lines. Alex has an in-home
office that is used exclusively and regularly to set up appointments and write up orders and other reports for the
products Alex sells. Alex occasionally writes up orders
and sets up appointments from a hotel room while away
on business overnight.
Alex’s business is selling products to customers at various locations throughout an assigned territory. To make
these sales, Alex regularly visits customers to explain the
available products and take orders.
Alex’s home office qualifies as a principal place of business for deducting expenses for its use. Alex conducts administrative or management activities there and has no
other fixed location where substantial administrative or
management activities are conducted. The fact that Alex
conducts some administrative or management activities in
a hotel room (not a fixed location) does not disqualify the
home office from being a principal place of business. Alex
meets all the qualifications, including principal place of
business, so the expenses (subject to certain limitations,
explained later) can be deducted for the business use of
the home.

More Than One Trade or Business
The same home office can be the principal place of business for two or more separate business activities.
Whether your home office is the principal place of business for more than one business activity must be determined separately for each of your trade or business activities. You must use the home office exclusively and
regularly for one or more of the following purposes.

• As the principal place of business for one or more of
your trades or businesses.

• As a place to meet or deal with patients, clients, or

customers in the normal course of one or more of your
trades or businesses.

• If your home office is a separate structure, in connection with one or more of your trades or businesses.

You can use your home office for more than one trade
or business activity, but you cannot use it for any activities
that are not related to a trade or business.

Place To Meet Patients, Clients, or
Customers

Example 3. Taylor is a self-employed anesthesiologist. Taylor spends the majority of the time administering
anesthesia and postoperative care in three local hospitals.
One of the hospitals provides a small shared office where
Taylor could conduct administrative or management activities.
Taylor very rarely uses the office the hospital provides
but instead uses a room at home that has been converted
to an office. Taylor uses this room exclusively and regularly to conduct all the following activities.

If you meet or deal with patients, clients, or customers in
your home in the normal course of your business, even
though you also carry on business at another location, you
can deduct your expenses for the part of your home used
exclusively and regularly for business if you meet both the
following tests.

• Contacting patients, surgeons, and hospitals regard-

• Their use of your home is substantial and integral to

ing scheduling.

• Preparing for treatments and presentations.
• Maintaining billing records and patient logs.
• Satisfying continuing medical education requirements.
• Reading medical journals and books.
Taylor’s home office qualifies as a principal place of
business for deducting expenses for its use. Taylor conducts anesthesiologist-related administrative or management activities there and at no other fixed location where
substantial administrative or management activities for
this business are conducted. Taylor’s choice to use their
home office instead of the one provided by their hospital
does not disqualify the home office from being their principal place of business. Taylor’s performance of substantial
nonadministrative or nonmanagement activities at fixed locations outside their home also does not disqualify the
home office from being their principal place of business.
Taylor meets all the qualifications, including principal
place of business, so the expenses (subject to certain limitations, explained later) can be deducted for the business
use of the home.

Publication 587 (2025)

• You physically meet with patients, clients, or customers on your premises.

the conduct of your business.

Doctors, dentists, attorneys, and other professionals
who maintain offices in their homes will generally meet
this requirement.
Using your home for occasional meetings and telephone calls will not qualify you to deduct expenses for the
business use of your home.
The part of your home you use exclusively and regularly
to meet patients, clients, or customers does not have to be
your principal place of business.
Example. Sam, a self-employed attorney, works 3
days a week in a rented office, then works 2 days a week
at home, in a home office used only for business. Sam
regularly meets clients there. The home office qualifies for
a business deduction because Sam meets clients there in
the normal course of their business.

Separate Structure
You can deduct expenses for a separate free-standing
structure, such as a studio, workshop, garage, or barn, if
you use it exclusively and regularly for your business. The
structure does not have to be your principal place of
5

business or a place where you meet patients, clients, or
customers.
Example. Bobbie operates a floral shop in town. Bobbie grows the plants for the shop in a greenhouse located
at home. Bobbie uses the greenhouse exclusively and
regularly for the floral shop business, so Bobbie can deduct the expenses for its use (subject to certain limitations, described later).

Figuring the Deduction
After you determine that you meet the tests under Qualifying for a Deduction, you can begin to figure how much you
can deduct. When figuring the amount you can deduct for
the business use of your home, you will use either your actual expenses or a simplified method.
Electing to use the simplified method. The simplified
method is an alternative to the calculation, allocation, and
substantiation of actual expenses. You choose whether or
not to figure your deduction using the simplified method
each tax year. See Using the Simplified Method, later.

Actual Expenses
You must divide the expenses of operating your home between personal and business use. The part of a home operating expense you can use to figure your deduction depends on both of the following.

• Whether the expense is direct, indirect, or unrelated.
• The percentage of your home used for business.
Table 1 describes the types of expenses you may have
and the extent to which they are deductible.

Table 1. Types of Expenses
Expense

Description

Deductibility

Direct

Expenses only for
the business part
of your home.

Deductible in full.*

Examples:
Painting or repairs
only in the area
used for business.

Exception:
May be only partially
deductible in a daycare
facility. See Daycare
Facility, later.

Expenses for
keeping up
and running your
entire home.

Deductible based on the
percentage of your home
used for business.*

Indirect

Using Actual Expenses
If you do not or cannot elect to use the simplified method
for a home, you will figure your deduction for that home
using your actual expenses. You will also need to figure
the percentage of your home used for business and the
limit on the deduction.
If you are a partner or you use your home in your farming business and you file Schedule F (Form 1040), you
can use the Worksheet To Figure the Deduction for Business Use of Your Home, near the end of this publication,
to help you figure your deduction. If you use your home in
a trade or business and you file Schedule C (Form 1040),
you will use Form 8829 to figure your deduction.
Part-year use. You cannot deduct expenses for the business use of your home incurred during any part of the year
you did not use your home for business purposes. For example, if you begin using part of your home for business
on July 1, and you meet all the tests from that date until
the end of the year, consider only your expenses for the
last half of the year in figuring your allowable deduction.
Expenses related to tax-exempt income. Generally,
you cannot deduct expenses that are related to tax-exempt allowances. However, if you receive a tax-exempt
parsonage allowance or a tax-exempt military allowance,
your expenses for mortgage interest and real estate taxes
are deductible under the normal rules. No deduction is allowed for other expenses related to the tax-exempt allowance.
If your housing is provided free of charge and the value
of the housing is tax exempt, you cannot deduct the rental
value of any portion of the housing.

6

Examples:
Insurance,
utilities, and
general repairs.
Unrelated

Expenses only for
the parts of your
home not used
for business.

Not deductible.

Examples:
Lawn care or painting
a room not used
for business.
*Subject to the deduction limit, discussed later.

Tip: Form 8829 and the Worksheet To Figure the Deduction for Business Use of Your Home have separate columns for direct and indirect expenses.
Certain expenses are deductible to the extent they
would have been deductible as an itemized deduction on
your Schedule A or, if claiming the standard deduction,
would have increased your standard deduction had you
not used your home for business. If the expense is indirect, use the business percentage of these expenses to
figure how much to include in your total business-use-of-the-home deduction. If you are itemizing your
deductions on Schedule A (Form 1040), these expenses
include the following.

• Real estate taxes.
• Home mortgage interest.
• Casualty losses attributable to a federally declared
disaster.

Publication 587 (2025)

If you are claiming the standard deduction, these expenses only include net qualified disaster losses that increase
your standard deduction.

sometimes treated as a permanent improvement and are
not deductible. See Permanent improvements, later, under
Depreciating Your Home.

See the Instructions for the Worksheet To Figure the
Deduction for Business Use of Your Home, later in this
publication, or the Instructions for Form 8829 for more information about figuring and deducting the business part
of these otherwise allowable expenses. For more information about deducting real estate taxes, see Pub. 530. For
more information about deducting home mortgage interest, see Pub. 936. For more information about deducting
casualty losses, see Pub. 547.

Security system. If you install a security system that protects all the doors and windows in your home, you can deduct the business part of the expenses you incur to maintain and monitor the system. You can also take a
depreciation deduction for the part of the cost of the security system relating to the business use of your home.

Other expenses are deductible only if you use your
home for business. If the expense is indirect, use the business percentage of these expenses to figure how much to
include in your total business-use-of-the-home deduction.
These expenses generally include (but are not limited to)
the following.

• Casualty losses not attributable to a federally declared
disaster.

• Depreciation (discussed under Depreciating Your
Home, later).

• Insurance.
• Rent paid for the use of property you do not own but
use in your trade or business.

• Repairs.
• Security system.
• Utilities and services. (But see Telephone, later, for different rules that apply to telephone expenses.)

Insurance. You can deduct the cost of insurance that
covers the business part of your home. However, if your
insurance premium gives you coverage for a period that
extends past the end of your tax year, you can deduct only
the business percentage of the part of the premium that
gives you coverage for your tax year. You can deduct the
business percentage of the part that applies to the following year in that year.
Rent. If you rent the home you occupy and meet the requirements for business use of the home, you can deduct
part of the rent you pay. To figure your deduction, multiply
your rent payments by the percentage of your home used
for business.
If you own your home, you cannot deduct the fair rental
value of your home. However, see Depreciating Your
Home, later.
Repairs. The cost of repairs that relate to your business,
including labor (other than your own labor), is a deductible
expense. For example, a furnace repair benefits the entire
home. If you use 10% of your home for business, you can
deduct 10% of the cost of the furnace repair.
Repairs keep your home in good working order over its
useful life. Examples of common repairs are patching
walls and floors, painting, wallpapering, repairing roofs
and gutters, and mending leaks. However, repairs are
Publication 587 (2025)

Utilities and services. Expenses for utilities and services, such as electricity, gas, trash removal, and cleaning
services, are primarily personal expenses. However, if you
use part of your home for business, you can deduct the
business part of these expenses. Generally, the business
percentage for utilities is the same as the percentage of
your home used for business.
Telephone. The basic local telephone service charge,
including taxes, for the first telephone landline into your
home is a nondeductible personal expense. However,
charges for business long-distance phone calls on that
line, as well as the cost of a second line into your home
used exclusively for business, are deductible business expenses. Do not include these expenses as a cost of using
your home for business. Deduct these charges separately
on the appropriate form or schedule. For example, if you
file Schedule C (Form 1040), deduct these expenses on
line 25, Utilities (instead of line 30, Expenses for business
use of your home).

Depreciating Your Home
If you own your home and qualify to deduct expenses for
its business use, you can claim a deduction for depreciation. Depreciation is an allowance for the wear and tear on
the part of your home used for business. You cannot depreciate the cost or value of the land. You recover its cost
when you sell or otherwise dispose of the property.
Before you figure your depreciation deduction, you
need to know the following information.

• The month and year you started using your home for
business.

• The adjusted basis and fair market value of your home
(excluding land) at the time you began using it for
business.

• The cost of any improvements before and after you
began using the property for business.

• The percentage of your home used for business. See
Business Percentage, later.

Adjusted basis defined. The adjusted basis of your
home is generally its cost, plus the cost of any permanent
improvements you made to it, minus any casualty losses
or depreciation deducted in earlier tax years. For a discussion of adjusted basis, see Pub. 551.
Permanent improvements. A permanent improvement increases the value of property, adds to its life, or
7

gives it a new or different use. Examples of improvements
are replacing electric wiring or plumbing, adding a new
roof or addition, paneling, or remodeling.
You must carefully distinguish between repairs and improvements. See Repairs, earlier, under Actual Expenses.
You must also keep accurate records of these expenses.
These records will help you decide whether an expense is
a deductible or a capital (added to the basis) expense.
However, if you make repairs as part of an extensive remodeling or restoration of your home, the entire job is an
improvement.

nonresidential real property under MACRS. Under
MACRS, nonresidential real property is depreciated using
the straight line method over 39 years. For more information on MACRS and other methods of depreciation, see
Pub. 946.
To figure the depreciation deduction, you must first figure the part of the cost of your home that can be depreciated (depreciable basis). The depreciable basis is figured
by multiplying the percentage of your home used for business by the smaller of the following.

Example. You buy an older home and fix up two rooms
as a beauty salon. You patch the plaster on the ceilings
and walls, paint, repair the floor, install an outside door,
and install new wiring, plumbing, and other equipment.
Normally, the patching, painting, and floor work are repairs
and the other expenses are permanent improvements.
However, because the work gives your property a new
use, the entire remodeling job is a permanent improvement and its cost is added to the basis of the property. You
cannot deduct any portion of it as a repair expense.

the date you began using your home for business.

Adjusting for depreciation deducted in earlier
years. Decrease the basis of your property by the depreciation you deducted, or could have deducted, on your tax
returns under the method of depreciation you properly selected. If you deducted less depreciation than you could
have under the method you selected, decrease the basis
by the amount you could have deducted under that
method. If you did not deduct any depreciation, decrease
the basis by the amount you could have deducted.
If you deducted more depreciation than you should
have, decrease your basis by the amount you should have
deducted, plus the part of the excess depreciation you deducted that actually decreased your tax liability for any
year.
If you deducted the incorrect amount of depreciation,
see Pub. 946.
Fair market value defined. The fair market value of your
home is the price at which the property would change
hands between a buyer and a seller, neither having to buy
or sell, and both having reasonable knowledge of all necessary facts. Sales of similar property, on or about the
date you begin using your home for business, may be
helpful in determining the property’s fair market value.
Figuring the depreciation deduction for the current
year. If you began using your home for business before
2025, continue to use the same depreciation method you
used in past tax years. However, if you figured your deduction for business use of the home using the simplified
method in a prior year, you will need to use the optional
depreciation table for modified accelerated cost recovery
system (MACRS) property. See Pub. 946 for the optional
depreciation tables. For more information about the simplified method, see Revenue Procedure 2013-13, 2013-06
I.R.B.
478,
available
at
IRS.gov/irb/
2013-06_IRB#RP-2013-13.
If you began using your home for business for the first
time in 2025, depreciate the business part as
8

• The adjusted basis of your home (excluding land) on
• The fair market value of your home (excluding land) on
the date you began using your home for business.

Depreciation table. If 2025 was the first year you
used your home for business, you can figure your 2025
depreciation for the business part of your home by using
the appropriate percentage from the following table.

Table 2. MACRS Percentage Table for
39-Year Nonresidential Real
Property
Month First Used for Business

Percentage To Use

1

2.461%

2

2.247%

3

2.033%

4

1.819%

5

1.605%

6

1.391%

7

1.177%

8

0.963%

9

0.749%

10

0.535%

11

0.321%

12

0.107%

Multiply the depreciable basis of the business part of
your home by the percentage from the table for the first
month you use your home for business. See Pub. 946 for
the percentages for the remaining tax years of the recovery period.
Example. In May, Frankie began to use one room at
home exclusively and regularly to meet clients. This room
is 8% of the square footage of the home. Frankie bought
the home in 2014 for $125,000. Frankie determined from
the property tax records that the adjusted basis in the
house (exclusive of land) is $115,000. In May, the house
had a fair market value of $165,000. Frankie multiplies the
adjusted basis of $115,000 (which is less than the fair
market value) by 8%. The result is $9,200, the depreciable
basis for the business part of the house.
Frankie files a tax return based on the calendar year.
May is the fifth month of this tax year. Frankie multiplies
the depreciable basis of $9,200 by 1.605% (0.01605), the
percentage from the table for the fifth month. Frankie’s depreciation deduction is $147.66.
Publication 587 (2025)

Depreciating permanent improvements. Add the costs
of permanent improvements made before you began using your home for business to the basis of your property.
Depreciate these costs as part of the cost of your home,
as explained earlier. The costs of improvements made after you begin using your home for business (that affect the
business part of your home, such as a new roof) are depreciated separately. Multiply the cost of the improvement
by the business-use percentage and depreciate the result
over the recovery period that would apply to your home if
you began using it for business at the same time as the
improvement. For improvements made this year, the recovery period is 39 years. For the percentage to use for
the first year, see Table 2. For more information on recovery periods, see Pub. 946.

If your gross income from the business use of your
home is less than your total business expenses, your deduction for certain expenses for the business use of your
home is limited.
Your deduction of otherwise nondeductible expenses,
such as insurance, utilities, and depreciation of your home
(with depreciation of your home taken last) that are allocable to the business, is limited to the gross income from the
business use of your home minus the sum of the following.

Business Percentage

1. The business part of expenses you could deduct even
if you did not use your home for business (such as
mortgage interest, real estate taxes, and casualty losses attributable to a federally declared disaster if you
itemize deductions on Schedule A (Form 1040) or net
qualified disaster losses if you claim the standard deduction).

To find the business percentage, compare the size of the
part of your home that you use for business to your whole
house. Use the resulting percentage to figure the business
part of the expenses for operating your entire home.

2. The business expenses that relate to the business activity in the home (for example, business phone, supplies, and depreciation on equipment) but not to the
use of the home itself.

You can use any reasonable method to determine the
business percentage. The following are two commonly
used methods for figuring the percentage.
1. Divide the area (length multiplied by the width) used
for business by the total area of your home.
2. If the rooms in your home are all about the same size,
you can divide the number of rooms used for business
by the total number of rooms in your home.
Example 1.

• Your office is 240 square feet (12 feet × 20 feet).
• Your home is 1,200 square feet.
• Your office is 20% (240 ÷ 1,200) of the total area of
your home.

• Your business percentage is 20%.
Example 2.

• You use one room in your home for business.
• Your home has 10 rooms, all about equal size.
• Your office is 10% (1 ÷ 10) of the total area of your
home.

• Your business percentage is 10%.
Tip: Use lines 1–7 of Form 8829 or lines 1–3 on the
Worksheet To Figure the Deduction for Business Use of
Your Home (near the end of this publication) to figure your
business percentage.

Deduction Limit
If your gross income from the business use of your home
equals or exceeds your total business expenses (including
depreciation), you can deduct all your business expenses
related to the use of your home.
Publication 587 (2025)

If you are self-employed, do not include in (2) above your
deduction for one-half of your self-employment tax.
Carryover of unallowed expenses. If your business expenses related to the home are greater than the current
year’s limit, you can carry over the excess to the next year
in which you use actual expenses. They are subject to the
deduction limit for that year, whether or not you live in the
same home during that year.
Figuring the deduction limit and carryover. If you are
a partner or you file Schedule F (Form 1040), use the
Worksheet To Figure the Deduction for Business Use of
Your Home, near the end of this publication. If you file
Schedule C (Form 1040), figure your deduction limit and
carryover on Form 8829.
Example. You meet the requirements for deducting expenses for the business use of your home. You use 20%
of your home for business. You are itemizing your deductions on Schedule A (Form 1040) and your home mortgage interest and total state and local taxes would not be
limited on your Schedule A if you had not used your home
for business. In 2025, your business expenses and the expenses for the business use of your home are deducted
from your gross income in the following order.
Gross income from business . . . . . . . . . . . . . . . . . . .
Minus:
Deductible mortgage interest
and real estate taxes (20%) . . . . . . . . . . . . . . . . .
Business expenses not related to the use of your home
(100%) (business phone, supplies, and depreciation on
equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduction limit . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minus other expenses allocable to business use of home:
Maintenance, insurance, and utilities (20%) . . . . . . . .
Depreciation allowed (20%) . . . . . . . . . . . . . . . . .
Other expenses up to the deduction limit . . . . . . . . . . .
Depreciation carryover to 2026 ($1,600 − $200)
(subject to deduction limit in 2026) . . . . . . . . . . . . . . .

$6,000
3,000
2,000
$1,000
800
200
$1,000
$1,400

9

You can deduct all of the business part of your deductible mortgage interest and real estate taxes ($3,000). You
can also deduct all of your business expenses not related
to the use of your home ($2,000). Additionally, you can deduct all of the business part of your expenses for maintenance, insurance, and utilities, because the total ($800) is
less than the $1,000 deduction limit. Your deduction for
depreciation for the business use of your home is limited
to $200 ($1,000 minus $800) because of the deduction
limit. You can carry over the $1,400 balance and add it to
your depreciation for 2026, subject to your deduction limit
in 2026.
More than one place of business. If part of the gross
income from your trade or business is from the business
use of part of your home and part is from a place other
than your home, you must determine the part of your gross
income from the business use of your home before you
figure the deduction limit. In making this determination,
consider the time you spend at each location, the business investment in each location, and any other relevant
facts and circumstances.
Tip: If your home office qualifies as your principal place
of business, you can deduct your daily transportation
costs between your home and another work location in the
same trade or business. For more information on transportation costs, see Pub. 463.

Using the Simplified Method
The simplified method is an alternative to the calculation,
allocation, and substantiation of actual expenses. In most
cases, you will figure your deduction by multiplying $5, the
prescribed rate, by the area of your home used for a qualified business use. The area you use to figure your deduction is limited to 300 square feet. See Simplified Amount,
later, for information about figuring the amount of the deduction.
For more information about the simplified method, see
Revenue Procedure 2013-13, 2013-06 I.R.B. 478, available at IRS.gov/irb/2013-06_IRB#RP-2013-13.
Actual expenses and depreciation of your home. If
you elect to use the simplified method, you cannot deduct
any actual expenses for the business except for business
expenses that are not related to the use of the home. You
also cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for
the portion of the home that is used for a qualified business use. The depreciation deduction allowable for that
portion of the home is deemed to be zero for a year you
use the simplified method. If you figure your deduction for
business use of the home using actual expenses in a subsequent year, you will have to use the appropriate optional
depreciation table for MACRS to figure your depreciation.
More information. For more information about claiming depreciation in a subsequent year, see Revenue Procedure 2013-13, 2013-06 I.R.B. 478, available at
IRS.gov/irb/2013-06_IRB#RP-2013-13. See Pub. 946 for
the optional depreciation tables.
10

Tip: Although you cannot deduct any depreciation or
section 179 expense for the portion of your home used for
a qualified business use, you may still claim depreciation
or the section 179 expense deduction on other assets
used in the business (for example, furniture and equipment).
Expenses deductible without regard to business use.
When using the simplified method, treat as personal expenses your mortgage interest, real estate taxes, and
casualty losses. If you also rent part of your home, you
must still allocate these expenses between rental use and
personal use (for this purpose, personal use includes
business use reported using the simplified method).
No deduction of carryover of actual expenses. If you
used actual expenses to figure your deduction for business use of the home in a prior year and your deduction
was limited, you cannot deduct the disallowed amount
carried over from the prior year during a year you figure
your deduction using the simplified method. Instead, you
will continue to carry over the disallowed amount to the
next year that you use actual expenses to figure your deduction.

Electing the Simplified Method
You choose whether or not to figure your deduction using
the simplified method each tax year. Make the election for
a home by using the simplified method to figure the deduction for the qualified business use of that home on a
timely filed, original federal income tax return. An election
for a tax year, once made, is irrevocable. A change from
using the simplified method in one year to actual expenses in a succeeding tax year, or vice versa, is not a
change in method of accounting and does not require the
consent of the Commissioner.
Shared use. If you share your home with someone else
who also uses the home in a business that qualifies for
this deduction, each of you makes your own election.
More than one qualified business use. If you conduct
more than one business that qualifies for this deduction in
your home, your election to use the simplified method applies to all your qualified business uses of that home.
More than one home. If you used more than one home
in your business during the year (for example, you moved
during the year), you can elect to use the simplified
method for only one of the homes. You must figure the deduction for any other home using actual expenses.

Simplified Amount
Your deduction for the qualified business use of a home is
the sum of each amount you figure for a separate qualified
business use of your home. To figure your deduction for
the business use of a home using the simplified method,

Publication 587 (2025)

you will need to know the following information for each
qualified business use of the home.

• The allowable area of your home used in conducting

the business. If you did not conduct the business for
the entire year in the home or the area changed during
the year, you will need to know the allowable area you
used and the number of days you conducted the business for each month.

• The gross income from the business use of your
home.

• The amount of the business expenses that are not related to the use of your home.

• If the qualified business use is for a daycare facility

that uses space in your home on a regular (but not exclusive) basis, you will need to know the percentage of
time that part of your home is used for daycare.

To figure the amount you can deduct for qualified business use of your home using the simplified method, follow
these three steps.
1. Multiply the allowable area by $5 (or less than $5 if the
qualified business use is for a daycare that uses
space in your home on a regular, but not exclusive,
basis). See Allowable area and Space used regularly
for daycare, later.
2. Subtract the expenses from the business that are not
related to the use of the home from the gross income
related to the business use of the home. If these expenses are greater than the gross income from the
business use of the home, then you cannot take a deduction for this business use of the home. See Gross
income limitation, later.
3. Take the smaller of the amounts from (1) and (2). This
is the amount you can deduct for this qualified business use of your home using the simplified method.
If you are a partner or you use your home in your farming business and file Schedule F (Form 1040), you can
use the Simplified Method Worksheet, near the end of this
publication, to help you figure your deduction. If you use
your home in a trade or business and you file Schedule C
(Form 1040), you will use the Simplified Method Worksheet in your Instructions for Schedule C to figure your deduction.
Allowable area. In most cases, the allowable area is the
smaller of the actual area (in square feet) of your home
used in conducting the business and 300 square feet.
Your allowable area may be smaller if you conducted the
business as a qualified joint venture with your spouse, the
area used by the business was shared with another qualified business use, you used the home for the business for
only part of the year, or the area used by the business
changed during the year. You can use the Area Adjustment Worksheet (for simplified method), near the end of
this publication, to help you figure your allowable area for
a qualified business use.

Publication 587 (2025)

Area used by a qualified joint venture. If the qualified business use of the home is also a qualified joint venture, you and your spouse will figure the deduction for the
business use separately. Split the actual area used in conducting business between you and your spouse in the
same manner you split your other tax attributes. Then
each spouse will figure the allowable area separately. For
more information about qualified joint ventures, see Qualified Joint Venture in the Instructions for Schedule C.
Shared use. If you share your home with someone
else who uses the home to conduct business that also
qualifies for this deduction, you may not include the same
square feet to figure your deduction as the other person.
You must allocate the shared space between you and the
other person in a reasonable manner.
Example. Lindsey and Tracy are roommates. Lindsey
uses 300 square feet of their home for a qualified business
use. Tracy uses 200 square feet of their home for a separate qualified business use. Lindsey and Tracy both share
100 square feet for their respective qualified businesses in
their mutual home. In addition to the portion that they do
not share, Lindsey and Tracy can both claim 50 of the 100
square feet or divide the 100 square feet between them in
any reasonable manner. If divided evenly, Lindsey could
claim 250 square feet using the simplified method and
Tracy could claim 150 square feet.
More than one qualified business use. If you conduct more than one business qualifying for the deduction,
you are limited to a maximum of 300 square feet for all of
the businesses. Allocate the actual square footage used
(up to the maximum of 300 square feet) among your qualified business uses in a reasonable manner. However, do
not allocate more square feet to a qualified business use
than you actually use for that business.
Rental use. The simplified method does not apply to
rental use. A rental use that qualifies for the deduction
must be figured using actual expenses. If the rental use
and a qualified business use share the same area, you will
have to allocate the actual area used between the two
uses. You cannot use the same area to figure a deduction
for the qualified business use as you are using to figure
the deduction for the rental use.
Part-year use or area changes (for simplified
method only). If your qualified business use was for a
portion of the year (for example, a seasonal business, a
business that begins during the year, or you moved during
the year) or you changed the square footage of your qualified business use, your deduction is limited to the average
monthly allowable square footage. You calculate the average monthly allowable square footage by adding the
amount of allowable square feet you used in each month
and dividing the sum by 12. When determining the average monthly allowable square footage, you cannot take
more than 300 square feet into account for any 1 month.
Additionally, if your qualified business use was less than
15 days in a month, you must use -0- for that month.

11

Example 1. Jay owns a home and files federal income
taxes on a calendar year basis. On July 20, Jay began using 420 square feet at the home for a qualified business
use. Jay continued to use 420 square feet of the home until the end of the year. The average monthly allowable
square footage is 125 square feet, which is figured using
300 square feet for each month, August through December, divided by the number of months in the year ((0 + 0 +
0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12).
Example 2. Jessie owns a home and files federal income taxes on a calendar year basis. On April 20, Jessie
began using 100 square feet of the home for a qualified
business use. On August 5, Jessie expanded the area of
qualified use to 330 square feet. Jessie continued to use
the 330 square feet until the end of the year. The average
monthly allowable square footage is 150 square feet,
which is figured using 100 square feet for May through
July and 300 square feet for August through December,
divided by the number of months in the year ((0 + 0 + 0 + 0
+ 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12).
Example 3. Guadalupe owns a home and files federal
income taxes on a calendar year basis. From January 1
through July 16, Guadalupe used 300 square feet of the
home for a qualified business use. On July 17, Guadalupe
moved to a new home and immediately began using 200
square feet for the same qualified business use. While
preparing a 2025 tax return, Guadalupe decided to use
the simplified method to deduct the qualified business use
of the first home and files Form 8829 to deduct the qualified business use of the second home. The average
monthly allowable square footage is 175 square feet,
which is figured using 300 square feet for January through
July, divided by the number of months in the year ((300 +
300 + 300 + 300 + 300 + 300 + 300 + 0 + 0 + 0 + 0 + 0)/
12).
Caution: If you moved during the year, your average allowable square footage will generally be less than 300.
Gross income limitation. Your deduction for business
use of the home is limited to an amount equal to the gross
income derived from the qualified business use of the
home reduced by the business deductions that are unrelated to the use of your home. If the business deductions
that are unrelated to the use of your home are greater than
the gross income derived from the qualified business use
of your home, then you cannot take a deduction for this
qualified business use of your home.
Business expenses not related to use of the home.
These expenses relate to the business activity in the
home, but not to the use of the home itself. You can still
deduct business expenses that are unrelated to the use of
the home. See Where To Deduct, later. Examples of business expenses that are unrelated to the use of the home
are advertising, wages, supplies, dues, and depreciation
for equipment.
Space used regularly for daycare. If you do not use the
area of your home exclusively for daycare, you must reduce the prescribed rate (maximum $5 per square foot)
12

before figuring your deduction. The reduced rate will equal
the prescribed rate times a fraction. The numerator of the
fraction is the number of hours that the space was used
during the year for daycare and the denominator is the total number of hours during the year that the space was
available for all uses. You can use the Daycare Facility
Worksheet (for simplified method), near the end of this
publication, to help you figure the reduced rate.
Tip: If you used at least 300 square feet for daycare
regularly and exclusively during the year, then you do not
need to reduce the prescribed rate or complete the Daycare Facility Worksheet.

Daycare Facility
If you use space in your home on a regular basis for providing daycare, you may be able to claim a deduction for
that part of your home even if you use the same space for
nonbusiness purposes. To qualify for this exception to the
exclusive use rule, you must meet both of the following requirements.

• You must be in the trade or business of providing day-

care for children, persons age 65 or older, or persons
who are physically or mentally unable to care for themselves.

• You must have applied for, been granted, or be ex-

empt from having a license, certification, registration,
or approval as a daycare center or as a family or group
daycare home under state law. You do not meet this
requirement if your application was rejected or your license or other authorization was revoked.

Figuring the deduction. If you elect to use the simplified
method for your home, figure your deduction as described
earlier in Using the Simplified Method under Figuring the
Deduction.
If you are figuring your deduction using actual expenses and you regularly use part of your home for daycare,
figure what part is used for daycare, as explained in Business Percentage, earlier, under Figuring the Deduction. If
you also use that part exclusively for daycare, deduct all
the allocable expenses, subject to the deduction limit, as
explained earlier.
If the use of part of your home as a daycare facility is
regular, but not exclusive, you must figure the percentage
of time that part of your home is used for daycare. A room
that is available for use throughout each business day and
that you regularly use in your business is considered to be
used for daycare throughout each business day. You do
not have to keep records to show the specific hours the
area was used for business. You can use the area occasionally for personal reasons. However, a room you use
only occasionally for business does not qualify for the deduction. No deduction is allowed for the cost of a basic local telephone line provided to the home.
Tip: To find the percentage of time you actually use
your home for business, compare the total time used for
business to the total time that part of your home can be
used for all purposes. You can compare the hours of
Publication 587 (2025)

business use in a week with the number of hours in a
week (168). Or you can compare the hours of business
use for the year with the number of hours in the year
(8,760 in 2025). If you started or stopped using your home
for daycare in 2025, you must prorate the number of hours
based on the number of days the home was available for
daycare.
Example 1. Rene used the basement at home to operate a daycare business for children. Rene figures the
business percentage of the basement as follows.
Square footage of the basement
Square footage of the home

=

1,600
3,200

=

50%

Rene used the basement for daycare an average of 12
hours a day, 5 days a week, for 50 weeks a year. During
the other 12 hours a day, the family could use the basement. Rene figures the percentage of time the basement
was used for daycare as follows.
Number of hours used for daycare (12 x 5 x 50)
=
Total number of hours in the year (24 x 365)

3,000
= 34.25%
8,760

Rene can deduct 34.25% of any direct expenses for the
basement. However, because Rene’s indirect expenses
are for the entire house, Rene can deduct only 17.12% of
the indirect expenses. Rene figures the percentage for
their indirect expenses as follows.
Business percentage of the basement . . . . . . . . . . . . .
Multiplied by: Percentage of time used for daycare . . . . .
Percentage for indirect expenses . . . . . . . . . . . . . . . .

50%
× 34.25%
17.12%

Rene completes Form 8829, Part I, figuring the percentage of the home used for business, including the percentage of time the basement was used.
In Part II, Rene figures the deductible expenses. Rene
uses the following information to complete Part II.
Gross income from the daycare business . . . . . . . . . . .
Expenses not related to the business use of the home . . .
Tentative profit . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$50,000
$25,000
$25,000

Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Painting the basement . . . . . . . . . . . . . . . . . . . . . . .

$8,400
$850
$500

Rene enters a tentative profit, $25,000, on line 8. (This
figure is the same as the amount on line 29 of Schedule C
(Form 1040)).
The expenses paid for rent and utilities relate to the entire home. Therefore, Rene enters the amount paid for rent
on line 19, column (b), and the amount paid for utilities on
line 21, column (b). Rene shows the total of these expenses on line 23, column (b). For line 24, Rene multiplies the
amount on line 23, column (b), by the percentage on line 7
and enters the result, $1,584.
Rene paid $500 to have the basement painted. The
painting is a direct expense. However, because the basement was not used exclusively for daycare, Rene must
multiply $500 by the percentage of time the basement was
Publication 587 (2025)

used for daycare (34.25% – line 6). Rene then enters $171
(34.25% × $500) on line 20, column (a). Rene then adds
line 23, column (a), and line 24 and enters $1,755 ($171 +
$1,584) on line 26. This is less than Rene’s deduction limit
(line 15), so Rene can deduct the entire amount. Rene follows the instructions to complete the rest of Part II and enters $1,755 on lines 34 and 36. Then Rene carries the
$1,755 to line 30 of Schedule C (Form 1040).
Example 2. Assume the same facts as in Example 1
except that Rene also has another room that was available
each business day for children to take naps in. Although
Rene did not keep a record of the number of hours the
room was used for naps, it was used for part of each business day. Since the room was available for business use
during regular operating hours each business day and
was used regularly in the business, it is considered used
for daycare throughout each business day. The basement
and room are 60% of the total area of the home. In figuring
Rene’s expenses, 34.25% of any direct expenses for the
basement and room are deductible. In addition, 20.55%
(34.25% × 60%) of the indirect expenses are deductible.
Example 3. Assume the same facts as in Example 1
except that Rene stopped using the home for a daycare
facility on June 24, 2025. Rene used the basement for
daycare an average of 12 hours a day, 5 days a week, but
for only 25 weeks of the year. During the other 12 hours a
day, Rene’s family could still use the basement. Rene figures the percentage of time the basement was used for
business as follows.
Number of hours used for daycare (12 x 5 x 25)
Total number of hours during period used (24 x =
175)

1,500
= 35.71%
4,200

Rene can deduct 35.71% of any direct expenses for the
basement. However, because the indirect expenses are
for the entire house, Rene can deduct only 17.86% of the
indirect expenses. Rene then figures the percentage for
the indirect expenses as follows.
Business percentage of the basement . . . . . . . . . . . . .
Multiplied by: Percentage of time used for daycare . . . . .
Percentage for indirect expenses . . . . . . . . . . . . . . . .

50%
× 35.71%
17.86%

Meals. If you provide food for your daycare recipients, do
not include the expense as a cost of using your home for
business. Claim it as a separate deduction on your Schedule C (Form 1040). You can never deduct the cost of food
consumed by you or your family. You can deduct as a
business expense 100% of the actual cost of food consumed by your daycare recipients (see Standard meal and
snack rates, later, for an optional method for eligible children) and generally only 50% of the cost of food consumed by your employees. For more information on meals
that meet these requirements, see Meals in chapter 2 of
Pub. 15-B.
If you deduct the actual cost of food for your daycare
business, keep a separate record (with receipts) of your
family’s food costs.
13

Reimbursements you receive from a sponsor under the
Child and Adult Care Food Program of the Department of
Agriculture are taxable only to the extent they exceed your
expenses for food for eligible children. If your reimbursements are more than your expenses for food, show the difference as income in Part I of Schedule C (Form 1040). If
your food expenses are greater than the reimbursements,
show the difference as an expense in Part V of Schedule C (Form 1040). Do not include payments or expenses
for your own children if they are eligible for the program.
Follow this procedure even if you receive a Form
1099-MISC, Miscellaneous Information, reporting a payment from the sponsor.
Standard meal and snack rates. If you qualify as a
family daycare provider, you can use the standard meal
and snack rates, instead of actual costs, to compute the
deductible cost of meals and snacks provided to eligible
children. For these purposes:

• A family daycare provider is a person engaged in the
business of providing family daycare;

• Family daycare is childcare provided to eligible chil-

dren in the home of the family daycare provider. The
care must be nonmedical, not involve a transfer of legal custody, and generally last less than 24 hours
each day; and

• Eligible children are minor children receiving family

daycare in the home of the family daycare provider. Eligible children do not include children who are full-time
or part-time residents in the home where the childcare
is provided or children whose parents or guardians are
residents of the same home. Eligible children do not
include children who receive daycare services for personal reasons of the provider. For example, if a provider provides daycare services for a relative as a favor to that relative, that child is not an eligible child.

You can compute the deductible cost of each meal and
snack you actually purchased and served to an eligible
child during the time period you provided family daycare
using the standard meal and snack rates shown in Table 3. You can use the standard meal and snack rates for
a maximum of one breakfast, one lunch, one dinner, and
three snacks per eligible child per day. If you receive reimbursement for a particular meal or snack, you can deduct
only the portion of the applicable standard meal or snack
rate that is more than the amount of the reimbursement.
You can use either the standard meal and snack rates
or actual costs to calculate the deductible cost of food provided to eligible children in the family daycare for any particular tax year. If you choose to use the standard meal
and snack rates for a particular tax year, you must use the
rates for all your deductible food costs for eligible children
during that tax year. However, if you use the standard
meal and snack rates in any tax year, you can use actual
costs to compute the deductible cost of food in any other
tax year.
If you use the standard meal and snack rates, you must
maintain records to substantiate the computation of the total amount deducted for the cost of food provided to eligible children. The records kept should include the name of
14

each child, dates and hours of attendance in the daycare,
and the type and quantity of meals and snacks served.
This information can be recorded in a log similar to the
one shown in Exhibit A, near the end of this publication.
The standard meal and snack rates include beverages,
but do not include nonfood supplies used for food preparation, service, or storage, such as containers, paper
products, or utensils. These expenses can be claimed as
a separate deduction on your Schedule C (Form 1040).

Table 3. Standard Meal and Snack Rates1
Location of
Family
Daycare
Provider

Breakfast Lunch

Dinner

Snack

States and
territories
other than
Alaska,
Guam,
Hawaii, Puerto
Rico, and the
U.S. Virgin
Islands

$1.66

$3.15

$3.15

$0.93

Alaska

$2.66

$5.10

$5.10

$1.52

Guam,
Hawaii, Puerto
Rico, and the
U.S. Virgin
Islands

$2.14

$4.09

$4.09

$1.22

The applicable rates for 2025 are the Child and Adult Care
Food Program reimbursement rates in effect on December 31,
2024.
1

Sale or Exchange of
Your Home
If you sell or exchange your home, you may be able to exclude up to $250,000 ($500,000 for certain married persons filing a joint return) of the gain on the sale or exchange. In most cases, you must meet the ownership and
use tests. However, even if you meet the ownership and
use tests, your home sale is not eligible for the exclusion if
either of the following is true.

• You acquired the property through a like-kind ex-

change (1031 exchange) during the past 5 years.

• You are subject to the expatriate tax.

Publication 587 (2025)

Ownership and use tests. The ownership and use tests
generally require that during the 5-year period ending on
the date of the sale:

of your property, also divide your maximum exclusion between that part of the property and the separate part used
as your home.

• You owned the home for at least 2 years (ownership

Excluding gain on the business part of your property. You can generally exclude gain on the part of your
property used for business if you owned and lived in that
part as your main home for at least 2 years during the
5-year period ending on the date of the sale.

test), and

• You lived in the home as your main home for at least 2

years (use test). The 2 years of residence can fall anywhere within the 5-year period, and it does not need to
be a single block of time.

Gain on Sale
If you use property partly as a home and partly for business, the treatment of any gain on the sale varies depending on whether the part of the property used for business
is part of your home or separate from it.

Part of Home Used for Business
If the part of your property used for business is within your
home, such as a room used as a home office for a business or rooms used to provide daycare, you do not need
to allocate gain on the sale of the property between the
business part of the property and the part used as a
home. In addition, you do not need to report the sale of the
business part on Form 4797, Sales of Business Property.
This is true whether or not you were entitled to claim any
depreciation. However, you cannot exclude the part of any
gain equal to any depreciation allowed or allowable after
May 6, 1997. See Depreciation, later.

Separate Part of Property Used for Business
You may have used part of your property as a home and a
separate part of it, such as an outbuilding, for business.
Use test not met for business part. You cannot exclude gain on the separate part of your property used for
business unless you owned and lived in that part of your
property for at least 2 years during the 5-year period ending on the date of the sale. If you do not meet the use test
for the business part of the property, an allocation of the
gain on the sale is required. For this purpose, you must allocate the basis of the property and the amount realized
upon its sale between the business part and the part used
as a home. You must report the sale of the business part
on Form 4797.
Use test met for business part (business use in year
of sale). If you used a separate part of your property for
business in the year of sale, you should treat the sale of
the property as the sale of two properties, even if you met
the use test for the business part. You must report the sale
of the business part on Form 4797.
To determine the amount to report on Form 4797, you
must divide your selling price, selling expenses, and basis
between the part of the property used for business and
the separate part used as your home. In the same way, if
you qualify to exclude any of the gain on the business part

Publication 587 (2025)

Use test met for business part (no business use in
year of sale). If you have used a separate part of your
property for business (though not in the year of sale) but
meet the use test for both the business part and the part
you use as a home, you do not need to treat the transaction as the sale of two properties. Also, you do not need to
file Form 4797. You can generally exclude gain on the entire property.

Depreciation
If you were entitled to deduct depreciation on the part of
your home used for business, you cannot exclude the part
of the gain equal to any depreciation you deducted (or
could have deducted) for periods after May 6, 1997. This
means that when figuring the amount of gain you can exclude, you must reduce the total gain by any depreciation
allowed or allowable on the part of your home used for
business after May 6, 1997.
If you can show by adequate records or other evidence
that the depreciation you actually deducted (the allowed
depreciation) was less than the amount you were entitled
to deduct (the allowable depreciation), the amount you
cannot exclude (and must subtract from your total gain
when figuring your exclusion) is the amount you actually
deducted.
You do not have to reduce the gain by any depreciation
you deducted (or could have deducted) for a separate
structure for which you cannot exclude the allocable portion of the gain.

Basis Adjustment
If you used any part of your home for business, you must
adjust the basis of your home for any depreciation that
was allowable for its business use, even if you did not
claim it. If you deducted less depreciation than you could
have under the method you properly selected, you must
decrease the basis by the amount you could have deducted under that method. If you deducted more depreciation
than you should have under the method you properly selected, you must decrease the basis by the amount you
should have deducted, plus the part of the excess deducted that actually decreased your tax liability for any year.
For more information on reducing the basis of your property for depreciation, see Pub. 551.

15

Reporting the Sale
Do not report the 2025 sale of your main home on your tax
return unless:

• You received a Form 1099-S, Proceeds From Real Estate Transactions, for the sale or exchange;

• You have a gain and you do not qualify to exclude all
of it;

• You have a gain and choose not to exclude it; or
• You have a loss from the sale that is deductible.
Caution: A loss from the sale of your home, or the personal part of your home if it was also used for business or
to produce rental income, is not deductible.
If any of these conditions apply, report the gain or loss
as explained in the Instructions for Schedule D.
If you used the home for business, you may have to use
Form 4797 to report the sale of the business part. See the
Instructions for Form 4797.

More Information
This section covers only the basic rules for the sale or exchange of your home. For more information, see Pub. 523.

Business Furniture and
Equipment
This section discusses the depreciation and section 179
deductions you may be entitled to take for furniture and
equipment you use in your home for business. These deductions are available whether or not you qualify to deduct
expenses for the business use of your home.
This section explains the different rules for each of the
following.

• Listed property.
• Property bought for business use.
• Personal property converted to business use.

Listed Property
If you use certain types of property, called listed property,
in your home, special rules apply. Listed property includes
any property of a type generally used for entertainment,
recreation, and amusement (including photographic, phonographic, and video recording equipment).
More-than-50%-use test. If you bought listed property
and placed it in service during the year, you must use it
more than 50% for business to claim a section 179 deduction or an accelerated depreciation deduction.
If your business use of listed property is 50% or less,
you cannot take a section 179 deduction and you must depreciate the property using the Alternative Depreciation
16

System (ADS) (straight line method). For more information
on ADS, see Pub. 946.
Listed property meets the more-than-50%-use test for
any year if its qualified business use is more than 50% of
its total use. You must allocate the use of any item of listed
property used for more than one purpose during the year
among its various uses. You cannot use the percentage of
investment use as part of the percentage of qualified business use to meet the more-than-50%-use test. However,
you do use the combined total of business and investment
use to figure your depreciation deduction for the property.
Years following the year placed in service. If, in a year
after you place an item of listed property in service, you
fail to meet the more-than-50%-use test for that item of
property, you may be required to do the following.
1. Figure depreciation, beginning with the year you no
longer use the property more than 50% for business,
using the straight line method (ADS).
2. Figure any excess depreciation (include any section
179 deduction on the property in figuring excess depreciation) and add it to:
a. Your gross income, and
b. The adjusted basis of your property.
For more information, see Pub. 946.
Reporting and recordkeeping requirements. If you
use listed property in your business, you must file Form
4562 to claim a depreciation or section 179 deduction.
Begin with Part V, Section A, of that form.
You cannot take any depreciation or section 179
deduction for the use of listed property unless you
RECORDS can prove your business/investment use with adequate records or sufficient evidence to support your own
statements.
To meet the adequate records requirement, you must
maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary
evidence that is sufficient to establish business/investment use. For more information on what records to keep,
see Pub. 946.

Property Bought for Business Use
If you bought certain property during 2025 to use in your
business, you can do any one of the following (subject to
the limits discussed later).

• Elect a section 179 deduction for the full cost of the
property.

• Depreciate the cost of the property.
• Take part of the cost as a section 179 deduction and
depreciate the balance.

Publication 587 (2025)

Section 179 Deduction
You can claim the section 179 deduction for the cost of
depreciable tangible personal property bought for use in
your trade or business. You can choose how much (subject to the limit) of the cost you want to deduct under section 179 and how much you want to depreciate. You can
spread the section 179 deduction over several items of
property in any way you choose as long as the total does
not exceed the maximum allowable. You cannot take a
section 179 deduction for the basis of the business part of
your home.
You elect the section 179 deduction by completing Part
I of Form 4562.
More information. For more information on the section
179 deduction, qualifying property, the dollar limit, and the
business income limit, see Pub. 946 and the Instructions
for Form 4562.

Depreciation
Use Parts II and III of Form 4562 to claim your deduction
for depreciation on property placed in service during the
year. Do not include any costs deducted in Part I (section
179 deduction).
Most business property normally used in a home office
is either 5-year or 7-year property under MACRS.

• 5-year property includes computers and peripheral

equipment, typewriters, calculators, adding machines,
and copiers.

• 7-year property includes office furniture and fixtures
such as desks, files, and safes.

Under MACRS, you generally use the half-year convention, which allows you to deduct a half-year of depreciation in the first year you use the property in your business.
If you place more than 40% of your depreciable property
in service during the last 3 months of your tax year, you
must use the mid-quarter convention instead of the
half-year convention.
After you have determined the cost of the depreciable
property (minus any section 179 deduction and special
depreciation allowance taken on the property) and
whether it is 5-year or 7-year property, use the table,
shown next, to figure your depreciation if the half-year
convention applies.

Table 4. MACRS Percentage Table for 5- and
7-Year Property Using Half-Year
Convention
Recovery Year

5-Year Property

7-Year Property

1
2
3
4
5
6
7
8

20.00%
32.00%
19.20%
11.52%
11.52%
5.76%

14.29%
24.49%
17.49%
12.49%
8.93%
8.92%
8.93%
4.46%

See Pub. 946 for a discussion of the mid-quarter convention and for complete MACRS percentage tables.
Example. In June 2025, Kerry bought a desk and
three chairs for office use. The total bill for the furniture
was $1,975. The taxable business income for the year
was $3,000 without any deduction for the office furniture.
Kerry can elect to do one of the following.

• Take a section 179 deduction for the full cost of the office furniture.

• Take part of the cost of the furniture as a section 179
deduction and depreciate the balance.

• Not take the section 179 deduction and depreciate the
office furniture using its full cost.

The furniture is 7-year property under MACRS. Kerry
does not take a section 179 deduction. Kerry multiplies
$1,975 by 14.29% (0.1429) to get the MACRS depreciation deduction of $282.23.

Personal Property Converted to
Business Use
If you use property in your home office that was used previously for personal purposes, you cannot take a section
179 deduction for the property.
If you began using the property for personal purposes
after 1980 and before 1987 and change it to business use
in 2025, you cannot take a special depreciation allowance
for the property. However, you can depreciate it. You generally depreciate the property under the accelerated cost
recovery system (ACRS). However, if the depreciation under ACRS is greater in the first year than the depreciation
under MACRS, you must depreciate it under MACRS. For
information on ACRS, see Pub. 534, Depreciating Property Placed in Service Before 1987.
If you began using the property for personal purposes
after 1986 and change it to business use in 2025, you may
be able to take a special depreciation allowance for the
property. You generally depreciate the property under
MACRS. The basis for depreciation of property changed
from personal to business use is the lesser of the following.

• The adjusted basis of the property on the date of
change.

Publication 587 (2025)

17

• The fair market value of the property on the date of

deduction. See Line 30 in the Instructions for Schedule C
for more information.

If you began using the property for personal purposes
before 1981 and change it to business use in 2025, depreciate the property by the straight line or declining balance
method based on salvage value and useful life.

If you use your home in your farming business and file
Schedule F (Form 1040), report your entire deduction for
business use of the home on line 32 of Schedule F (Form
1040). Enter “Business Use of Home” on the dotted line
beside the entry.

change.

Recordkeeping
You do not have to use a particular method of recordkeeping, but you must keep records that proRECORDS vide the information needed to figure your deductions for the business use of your home. You should keep
canceled checks, receipts, and other evidence of expenses you paid.
Your records must show the following information.

• The part of your home you use for business.
• That you use part of your home exclusively and regu-

larly for business as either your principal place of business or as the place where you meet or deal with clients or customers in the normal course of your
business. However, see the earlier discussion, Exceptions to Exclusive Use under Qualifying for a Deduction.

• The depreciation and expenses for the business part.
You must keep your records for as long as they are important for any tax law. This is usually the later of the following
dates.

• 3 years from the return due date or the date filed.
• 2 years after the tax was paid.
Keep records to prove your home’s depreciable basis.
This includes records of when and how you acquired your
home, your original purchase price, any improvements to
your home, and any depreciation you are allowed because
you maintained an office in your home. You can keep copies of Forms 8829 or the Worksheet To Figure the Deduction for Business Use of Your Home, found later in this
publication, as records of depreciation.
For more information on recordkeeping, see Pub. 583.

Where To Deduct
Deduct expenses for the business use of your home on
Form 1040 or Form 1040-SR. Where you deduct these expenses on the form depends on whether you are a
self-employed person or a partner.

Self-Employed Persons
If you use your home in your trade or business and file
Schedule C (Form 1040), report the entire deduction for
business use of your home on line 30 of Schedule C
(Form 1040). Whether you need to complete and attach
Form 8829 to your return depends on how you figure your
18

Expenses Deductible Without Regard to a
Business Connection
Certain expenses related to the use of your home may be
deducted whether or not you use your home for business.
These expenses may include some or all of your mortgage interest, real estate taxes, and casualty losses attributable to a federally declared disaster. Where you deduct
these expenses depends on how you figure your deduction for business use of the home.
Using actual expenses to figure the deduction. In
general, you will deduct the business portion of these expenses on Schedule C (Form 1040) or Schedule F (Form
1040) as part of your deduction for business use of your
home. If you itemize your deductions, you will deduct the
personal portion of these expenses on Schedule A (Form
1040).
Home mortgage interest. The business portion of
your home mortgage interest allowed as a deduction this
year will be included in the business use of the home deduction you report on Schedule C (Form 1040), line 30, or
Schedule F (Form 1040), line 32. If you cannot deduct the
business portion of your home mortgage interest in full
this year, you will carry over the remaining home mortgage
interest to a subsequent year in which you use actual expenses to figure your business portion of the home deduction.
If you itemize your deductions on Schedule A (Form
1040), only include the personal part of your deductible
mortgage interest on Schedule A (Form 1040), line 8a or
8b. The personal portion of your home mortgage interest
will generally be the amount of deductible home mortgage
interest you figured when treating all home mortgage interest as a personal expense and applying the Schedule A
(Form 1040) limits on deducting home mortgage interest,
reduced by the business or rental portions deducted or
carried over as a business or rental expense on Schedule C, E, or F, or any form other than Schedule A. Home
mortgage interest that exceeds the amount you figured after applying the Schedule A (Form 1040) limits on deducting home mortgage interest is not deductible as a personal expense.
Real estate taxes. You figure the business portion of
your real estate taxes using Form 8829 (if you file Schedule C (Form 1040)) or the Worksheet To Figure the Deduction for Business Use of Your Home in this publication (if
you file Schedule F (Form 1040)). The business portion of
your real estate taxes allowed as a deduction this year will
be included in the business use of the home deduction
you report on Schedule C (Form 1040), line 30, or Schedule F (Form 1040), line 32. If you cannot deduct the
Publication 587 (2025)

business portion of your real estate taxes in full this year,
you will carry over those real estate taxes to a subsequent
year in which you use actual expenses to figure your business portion of the home deduction.
If you itemize your deductions on Schedule A (Form
1040), only include the personal part of your real estate
taxes on Schedule A (Form 1040), line 5b. The personal
portion of your real estate taxes will generally be the
amount of real estate taxes you paid for the home reduced
by the business or rental portions deducted or carried over
as a business or rental expense on Schedule C, E, or F, or
any form other than Schedule A.
Casualty losses. You will figure the business portion
of the casualty losses attributable to your home using
Form 8829 (if you file Schedule C (Form 1040)) or the
Worksheet To Figure the Deduction for Business Use of
Your Home in this publication (if you file Schedule F (Form
1040)). The business portion of your casualty losses allowed as a deduction this year will be reported on line 27
in Section B of Form 4684. If you cannot deduct the business portion of your casualty losses in full this year, you
will carry over those losses to a subsequent year in which
you use actual expenses to figure your business of the
home deduction.
Only include the personal portion of your casualty losses in Section A of the Form 4684 you attach to your return. If you itemize your deductions on Schedule A (Form
1040), you will include the deductible personal portion of
the casualty losses attributable to your home figured on
line 18 of Form 4684 on line 15 of Schedule A and the net
qualified disaster losses attributable to your home figured
on line 15 of Form 4684 on line 16 of Schedule A. If you
are increasing your standard deduction by a net qualified
disaster loss, you will add the net qualified disaster loss
figured on line 15 of Form 4684 to your standard deduction using a Schedule A.
Using the simplified method to figure your deduction. If you use the simplified method to figure your deduction for the business use of a home, your mortgage interest, real estate taxes, and casualty losses are treated
as personal expenses, and they are subject to any limits
that apply to deducting personal expenses. No part of any
of these expenses can be deducted as a business expense on Schedule C (Form 1040) or Schedule F (Form
1040). Generally, you can only deduct these expenses if
you itemize your deductions on Schedule A (Form 1040).

Business Expenses for Use of Your Home
Other expenses related to the use of your home may be
deducted only to the extent they are related to the business use of your home. These expenses include insurance, maintenance, utilities, and depreciation of your
home. You cannot deduct the personal portion of any of
these expenses. Where you deduct the business portion
of these expenses depends on how you figure your deduction for business use of the home.
Using actual expenses to figure your deduction. If
you file Schedule C (Form 1040), report the other home
Publication 587 (2025)

expenses that would not be allowable if you did not use
your home for business (for example, insurance, maintenance, utilities, and depreciation) on the appropriate lines
of your Form 8829. If you rent rather than own your home,
report the rent you paid on line 19 of Form 8829. If these
expenses exceed the deduction limit, carry the excess
over to next year. The carryover will be subject to next
year’s deduction limit.
If you file Schedule F (Form 1040), include your otherwise nondeductible expenses (insurance, maintenance,
utilities, depreciation, etc.) with your total business-use-of-the-home expenses on Schedule F (Form
1040), line 32. Enter “Business Use of Home” on the dotted line beside the entry. If these expenses exceed the deduction limit, carry the excess over to the next year. The
carryover will be subject to next year’s deduction limit.
Using the simplified method to figure your deduction. You cannot deduct any of these expenses. The simplified method is an alternative to calculating and substantiating these expenses. Figure your deduction using the
Simplified Method Worksheet.

Business Expenses Not for Use of Your
Home
No matter how you figure the deduction for business use
of your home, deduct business expenses that are not for
the use of your home itself (dues, salaries, supplies, certain telephone expenses, depreciation of equipment, etc.)
on the appropriate lines of Schedule C (Form 1040) or
Schedule F (Form 1040). These expenses are not for the
use of your home, so they are not subject to the deduction
limit for business use of the home expenses.

Partners
You may be allowed to deduct unreimbursed ordinary and
necessary expenses you paid on behalf of the partnership
(including qualified expenses for the business use of your
home) if you were required to pay these expenses under
the partnership agreement and they are trade or business
expenses under section 162.
If you are using actual expenses to figure your deduction for the business use of your home, use the Worksheet
To Figure the Deduction for Business Use of Your Home,
later. If you are using the simplified method to figure your
deduction for the business use of your home, use the Simplified Method Worksheet, later.
Deducting unreimbursed partnership expenses. See
the following forms and related instructions for information
about deducting unreimbursed partnership expenses.

• Schedule E (Form 1040), Supplemental Income and
Loss.

• Schedule SE (Form 1040), Self-Employment Tax.
• Schedule K-1 (Form 1065), Partner’s Share of Current
Year Income, Deductions, Credits, and Other Items.

19

More information. For more information about partners
and partnerships, see Pub. 541.

Worksheet To Figure the
Deduction for Business Use of
Your Home
This worksheet is to be used by taxpayers filing Schedule F (Form 1040) or by partners with certain unreimbursed ordinary and necessary expenses if using actual
expenses to figure the deduction. If you are using the simplified method to figure your deduction, use the Simplified
Method Worksheet, later.

Instructions for the Worksheet To
Figure the Deduction for Business
Use of Your Home
The Worksheet To Figure the Deduction for Business Use
of Your Home is to be used by taxpayers filing Schedule F
(Form 1040) or by partners with certain unreimbursed ordinary and necessary expenses if using actual expenses
to figure the deduction. The following instructions explain
how to complete each part of the worksheet.
Partners. See Partners under Where To Deduct, earlier,
before completing the worksheet.
Caution: If you file Schedule C (Form 1040) or Schedule C (Form 1040) with Form 1040-SS and use actual expenses to figure your deduction, use Form 8829 instead of
this worksheet.

Part 1—Part of Your Home Used for
Business
Lines 1–3. If you figure the percentage based on area,
use lines 1 through 3 to figure the business-use percentage. Enter the percentage on line 3.
You can use any other reasonable method that accurately reflects your business-use percentage. If you operate a daycare facility and you meet the exception to the
exclusive use test for part or all of the area you use for
business, you must figure the business-use percentage
for that area as explained under Daycare Facility, earlier. If
you use another method to figure your business percentage, skip lines 1 and 2 and enter the percentage on line 3.

Part 2—Figure Your Allowable Deduction
Line 4. If you file Schedule F (Form 1040), enter your total gross income that is related to the business use of your
home. This would generally be the amount on line 9 of
Schedule F (Form 1040).
Lines 5–7. Use lines 5, 6, and 7 for business use of the
home expenses that would have been deductible as a
personal expense if you had not used your home for busi20

ness. These expenses include certain casualty losses,
mortgage interest, and real estate taxes.
Taxpayers claiming the standard deduction. If you
claim the standard deduction, you will not include any
mortgage interest, or real estate taxes on lines 6 and 7; instead, you will claim the entire business use of the home
portion of those expenses using lines 14 and 15. If you are
not increasing your standard deduction by a net qualified
disaster loss, then you will not include any casualty losses
on line 5; instead, you will claim the entire business use of
the home portion of your casualty losses on line 27. If you
are filing Schedule A to increase your standard deduction
by a net qualified disaster loss, see Casualty losses reported on line 5, later.
Tip: You may prefer to itemize your deductions on
Schedule A to claim amounts on lines 5, 6, and 7, even if
your total personal deductions are less than the standard
deduction.
Casualty losses reported on line 5. Figure the amount
to include in column (b) of line 5 as follows.
Step 1. Complete a worksheet version of Section A of
Form 4684 treating all your casualty losses (and gains) as
personal expenses. If you are itemizing your deductions,
when completing line 17 of this worksheet version of Form
4684, enter 10% of your adjusted gross income excluding
the gross income and deductions attributable to the business use of the home. Do not file this worksheet version of
Form 4684; instead, keep it for your records. You will complete a separate Form 4684 to attach to your return using
only the personal portion of your casualty losses (and
gains) for Section A.
Step 2. Include in column (b) of line 5 the loss amounts
from lines 15 and 18 of this worksheet version of Form
4684 that are attributable to the home in which you conducted the business and are the result of a federally declared disaster. If you are claiming an increased standard
deduction instead of itemizing your deductions, only use a
net qualified disaster loss on line 15 of the worksheet version of Form 4684 for this Step 2.
See the instructions for line 33, later, for the business
use of the home casualty losses that you must include in
Section B of the separate Form 4684 you attach to your
return.
Casualty losses reported on Schedule A. Use only
the personal portion of your casualty losses (and gains)
when completing Section A of the separate Form 4684
you attach to your return. The separate Form 4684 you attach to your return is used to figure the casualty losses
you can include on line 15 of Schedule A and the net
qualified disaster losses you can include on line 16 of
Schedule A.
Excess casualty losses. See the instructions for
line 27, later, to deduct the part of your casualty losses for
business use of your home not allowed because of the
limits on deducting casualty losses as a personal expense, including any losses that are not the result of a federally declared disaster.

Publication 587 (2025)

Worksheet To Figure the Deduction for Business Use of
Your Home

Keep for Your Records

Use this worksheet if you file Schedule F (Form 1040) or you are a partner, and you are using actual expenses to figure
your deduction for business use of the home. Use a separate worksheet for each qualified business use of your home.
PART 1—Part of Your Home Used for Business:
1) Area of home used for business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Total area of home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3) Percentage of home used for business (divide line 1 by line 2 and show result as percentage) . . . . .
PART 2—Figure Your Allowable Deduction
4) Gross income from business (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
(b)
Direct
Indirect
Expenses
Expenses
5) Casualty losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5)
6) Deductible mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . .
6)
7) Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7)
8) Total of lines 5 through 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8)
9) Multiply line 8, column (b), by line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9)
10) Add line 8, column (a), and line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10)
11) Business expenses not from business use of home (see instructions) . . . . . . . . . 11)
12) Add lines 10 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13) Deduction limit. Subtract line 12 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14) Excess mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15) Excess real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17) Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18) Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19) Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20) Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21) Add lines 14 through 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

%

4)

12)
13)

14)
15)
16)
17)
18)
19)
20)
21)

22) Multiply line 21, column (b), by line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22)
23) Carryover of operating expenses from prior year (see instructions) . . . . . . . . . . . . 23)
24) Add line 21, column (a), line 22, and line 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25) Allowable operating expenses. Enter the smaller of line 13 or line 24 . . . . . . . . . . . . . . . . . . . . . . . . .
26) Limit on excess casualty losses and depreciation. Subtract line 25 from line 13 . . . . . . . . . . . . . . . . .
27) Excess casualty losses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27)
28) Depreciation of your home from line 40 below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28)
29) Carryover of excess casualty losses and depreciation from prior year (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29)
30) Add lines 27 through 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31) Allowable excess casualty losses and depreciation. Enter the smaller of line 26 or line 30 . . . . . . . .
32) Add lines 10, 25, and 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33) Casualty losses included on lines 10 and 31 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34) Allowable expenses for business use of your home. (Subtract line 33 from line 32.) See instructions
for where to enter on your return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART 3—Depreciation of Your Home
35) Smaller of adjusted basis or fair market value of home (see instructions) . . . . . . . . . . . . . . . . . . . . . . .
36) Basis of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37) Basis of building (subtract line 36 from line 35) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38) Business basis of building (multiply line 37 by line 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39) Depreciation percentage (from applicable table or method) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40) Depreciation allowable (multiply line 38 by line 39) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART 4—Carryover of Unallowed Expenses to Next Year
41) Operating expenses. Subtract line 25 from line 24. If less than zero, enter -0- . . . . . . . . . . . . . . . . . . .
42) Excess casualty losses and depreciation. Subtract line 31 from line 30. If less than zero,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Publication 587 (2025)

1)
2)
3)

24)
25)
26)

30)
31)
32)
33)
34)
35)
36)
37)
38)
39)
40)

%

41)
42)

21

Mortgage interest reported on line 6. If you are claiming the standard deduction, do not report an amount on
line 6. If you itemize your deductions, figure the amount to
include in column (b) of line 6 as follows.
Step 1. Treat all the mortgage interest you paid as a
personal expense and figure the amount that would be deductible as an itemized deduction on Schedule A. See
Pub. 936 for more information about figuring the home
mortgage interest deduction and the limits that may apply.
Step 2. Include in column (b) of line 6 the amount of
deductible mortgage interest figured in Step 1 that is attributable to the home in which you conducted the business. Because the limits on deducting mortgage interest
as a personal expense are figured using all loans secured
by your home(s), do not claim mortgage interest in column
(a) as a direct expense, even if you use a separate structure in your home in connection with your trade or business.
Mortgage interest reported on Schedule A. When
you figure your itemized deduction for mortgage interest
on Schedule A, include the following amounts of deductible mortgage interest that you figured in Step 1 to the extent they are not deducted on another form, such as
Schedule E, as a rental expense.

• The amount of deductible mortgage interest you figured in Step 1 that is not attributable to the home in
which you conducted the business.

• The personal portion of deductible mortgage interest

you included in column (b) of line 6. For example, if
your business percentage on line 3 is 30%, 70% of the
amount you included in column (b) of line 6 is deductible as an itemized deduction on Schedule A.

Excess mortgage interest. See the instructions for
line 14, later, to deduct the part of your mortgage interest
from loans used to buy, build, or substantially improve the
home in which you conducted business that is not allowed
on line 6 because of the limits on deducting home mortgage interest as a personal expense.
Real estate taxes reported on line 7. If you are claiming the standard deduction, do not report an amount on
line 7. If you are itemizing deductions, figure the amount to
include on line 7 as follows.
Step 1. If the total of your state and local income (or if
elected on your Schedule A, general sales) taxes, real estate taxes, and personal property taxes is not more than
$10,000 ($5,000 if married filing separately), enter all the
real estate taxes attributable to the home in which you
conducted business in column (b) of line 7.
Step 2. If you do not meet the condition of Step 1, use
the following worksheet to figure the amount to include in
column (a) of line 7.

22

Line 7 Worksheet
1. Enter your state and local income taxes (or, if you
elect on Schedule A, your state and local general
sales taxes) that are personal expenses . . . . . . 1.
2. Enter all the state and local real estate taxes you
paid on the home in which you conducted
business . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3. Enter any other state and local real estate taxes
you paid that are a personal expense and not
included on line 2 . . . . . . . . . . . . . . . . . . . . 3.
4. Enter your state and local personal property
taxes that are a personal expense . . . . . . . . . . 4.
5. Add lines 1 through 4 . . . . . . . . . . . . . . . . . 5.
6. Multiply line 2 by the percentage on line 3 of the
Worksheet To Figure the Deduction for Business
Use of Your Home . . . . . . . . . . . . . . . . . . . 6.
7a. Subtract line 6 from line 5 . . . . . . . . . . . . . . . 7a.
7b. Is line 5 less than or equal to $10,000 ($5,000 if
married filing separately)?
Yes. Skip lines 7c and 7d. Enter $10,000
($5,000 if married filing separately) on line 8.
Then proceed to line 9.
No. Go to line 7c.
7c. Is line 7a greater than or equal to $40,000
($20,000 if married filing separately)?
Yes. Skip line 7d. Enter $10,000 ($5,000 if
married filing separately) on line 8. Then proceed
to line 9.
No. Go to line 7d.
7d. Would your modified adjusted gross income on
line 4 of the State and Local Tax Deduction
Worksheet in the Instructions for Schedule A
(Form 1040) be less than or equal to $500,000
($250,000 if married filing separately) if you
entered $40,000 ($20,000 if married filing
separately) on line 8 of this worksheet, next?
Yes. Enter $40,000 ($20,000 if married filing
separately) on line 8. Then proceed to line 9.
No or Unsure. See Iteration instructions,
later.
8. Enter the overall limit on the deduction for state
and local income, sales, and property taxes from
line 7b, 7c, 7d, or Step 6 of the Iteration
instructions (as applicable). . . . . . . . . . . . . . . 8.
9. Subtract line 7a from line 8. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
10. Real estate taxes reported on line 7. Enter the
smaller of line 6 or line 9 here and in column (a)
of line 7 of the Worksheet To Figure the
Deduction for Business Use of Your Home . . . . 10.
11. Excess real estate taxes reported on line 15.
Subtract line 10 from line 6 . . . . . . . . . . . . . . 11.

Publication 587 (2025)

Real estate taxes reported on Schedule A. When
you figure your itemized deduction for state and local
taxes on Schedule A, only include the personal portion of
your real estate taxes on line 5b of Schedule A.
Excess real estate taxes. See the instructions for
line 15, later, to deduct the part of your real estate taxes
for the home in which you conducted business that is not
allowed on line 7 because of the limitation on deducting
state and local taxes as a personal expense.
Iteration instructions. Use these instructions if you
answered “No” on line 7d of the Line 7 Worksheet, earlier.
Step 1. Enter $10,000 ($5,000 if married filing separately) on line 8 of the Line 7 Worksheet.
Step 2. Complete lines 9, 10, and 11 of the Line 7
Worksheet. Use the results from the Line 7 Worksheet to
complete the Worksheet to Figure the Deduction for Business Use of Your Home. Then use the results from the
Worksheet to Figure the Deduction for Business Use of
Your Home to determine the deduction for expenses for
business use of your home on Schedule F, line 32. If you
are a partner deducting unreimbursed partnership expenses, include the results in the appropriate column of
Schedule E, line 28. See Partners under Where To Deduct, earlier.
Step 3. Schedule E filers. Determine your total partnership income or loss on line 32 using the amount from
Step 2. Complete Schedule E, then figure any passive activity losses (Form 8582); net operating loss (Schedule 1,
line 8a); self-employment tax (Schedule SE); the deduction for one-half of self-employment tax (Schedule 1,
line 15); self-employed SEP, SIMPLE, and qualified plans
deduction (Schedule 1, line 16); self-employed health insurance deduction (Schedule 1, line 17); IRA deduction
(Schedule 1, line 20); student loan interest deduction
(Schedule 1, line 21); adjustments to income (Schedule 1,
line 26); and adjusted gross income (Form 1040 or
1040-SR, line 11a).
Schedule F filers. Determine your net profit (or loss)
on line 34 using the amount from Step 2. Then figure your
net operating loss (Schedule 1, line 8a); self-employment
tax (Schedule SE); the deduction for one-half of self-employment tax (Schedule 1, line 15); IRA deduction (Schedule 1, line 20); student loan interest deduction (Schedule
1, line 21); adjustments to income (Schedule 1, line 26);
and adjusted gross income (Form 1040 or 1040-SR,
line 11a).
Step 4. Enter the adjusted gross income amount determined in Step 3 on line 2 of the State and Local Tax Deduction Worksheet in the Instructions for Schedule A
(Form 1040). Figure your modified adjusted gross income
on line 4 of the State and Local Tax Deduction Worksheet.

• If this is the first time you completed Step 4, continue
to Step 5.

• If you are repeating Step 4, compare the current cal-

culation of modified adjusted gross income from this
step with the most recent prior calculation of modified
adjusted gross income from this step. Is the difference
between the current calculation of modified adjusted

Publication 587 (2025)

gross income and the most recent prior calculation of
adjusted gross income more than $1?
1. Yes. Continue to Step 5.
2. No. Use the deduction for expenses for business use
of your home determined in Step 2; the amounts determined in Step 3; the modified adjusted gross income determined in Step 4; and the overall limit on
the deduction for state and local income, sales, and
property taxes determined in the most recent calculation in Step 5 to complete your return. STOP.
Step 5. Use the modified adjusted gross income determined in Step 4 to compute the overall limit on the deduction for state and local income, sales, and property taxes
on line 9 of the State and Local Tax Deduction Worksheet
in the Instructions for Schedule A (Form 1040).
Step 6. Enter the overall limit on the deduction for state
and local income, sales, and property taxes determined in
Step 5 on line 8 of the Pub. 587 Line 7 Worksheet. Repeat
Steps 2 through 4.
Lines 9 and 10. Multiply your total indirect expenses
(line 8, column (b)) by the business percentage from
line 3. Enter the result on line 9. Add this amount to the total direct expenses (line 8, column (a)) and enter the total
on line 10.
Lines 11–13. Enter any other business expenses that are
not attributable to business use of the home on line 11.
Farmers should generally enter their total farm expenses
before deducting office-in-the-home expenses. Do not enter the deductible part of your self-employment tax. Add
the amounts on lines 10 and 11, and enter the total on
line 12. Subtract line 12 from line 4, and enter the result on
line 13. This is your deduction limit. You use it to determine whether you can deduct any of your other expenses
for business use of the home this year. If you cannot, you
will carry them over to the next year in which you use actual expenses to figure the deduction.
If line 13 is zero or less, enter -0-. Deduct your expenses for deductible home mortgage interest, real estate
taxes, casualty losses, and any business expenses not attributable to use of your home on the appropriate lines of
the schedule(s) for Form 1040 or Form 1040-SR, as explained earlier under Where To Deduct.
Lines 14–23. On lines 14 through 20, enter your otherwise nondeductible expenses for the business use of your
home. These include utilities, insurance, repairs, and
maintenance. If you rent, report the amount paid on
line 17. In column (a), enter the expenses that benefit only
the business part of your home (direct expenses). In column (b), enter the expenses that benefit the entire home
(indirect expenses). Multiply line 21, column (b), by the
business-use percentage (line 3) and enter this amount on
line 22.
If you deducted actual expenses for the business use of
your home on your 2024 tax return, enter on line 23 the
amount from line 41 of your 2024 worksheet. If you used
the simplified method in 2024, enter on line 23 the amount
from line 6a of your 2024 Simplified Method Worksheet.
23

Line 14—Excess home mortgage interest. If you
are claiming the standard deduction, enter all the home
mortgage interest paid for loans used to buy, build, or substantially improve the home in which you conducted business in column (b) of line 14. Do not include mortgage interest on a loan that did not benefit your home (for
example, a home equity loan used to pay off credit card
bills, to buy a car, or to pay tuition costs).
If you are itemizing deductions on Schedule A and the
amount you figured in Step 1 under Mortgage interest reported on line 6, earlier, was less than the full amount of
interest you paid because of the limits on deducting home
mortgage interest as a personal expense, include the excess attributable to the loans used to buy, build, or substantially improve the home in which you conducted business in column (b) of line 14.
Example. If you paid $15,000 of home mortgage interest on loans used to buy, build, or substantially improve
the home in which you conducted business but would only
be able to deduct $12,000 on Schedule A because of the
limits that apply to deducting home mortgage interest as a
personal expense, include $3,000 ($15,000 - $12,000 =
$3,000) in column (b) of line 14.
Line 15—Excess real estate taxes. If you are claiming the standard deduction, enter all the real estate taxes
paid on the home in which you conducted business in column (b) of line 15.
If you are itemizing deductions on Schedule A and you
used the Line 7 Worksheet to figure the amount to include
in column (a) of line 7, then include the amount from
line 11 of the Line 7 Worksheet in column (a) of line 15 of
the Worksheet To Figure the Deduction for Business Use
of Your Home; otherwise, do not enter an amount on
line 15.
Lines 26–31. On lines 26 through 31, figure your limit on
deductions for excess casualty losses and depreciation.
If you deducted actual expenses for business use of
your home on your 2024 tax return, enter on line 29 the
amount from line 42 of your 2024 worksheet. If you used
the simplified method in 2024, enter on line 29 the amount
from line 6b of your 2024 Simplified Method Worksheet.
Line 27—Excess casualty loss. Multiply the casualty losses attributable to the home in which you conducted business that are in excess of the amount reported on
line 5 (if any) by the business percentage of those losses
and enter the result.
Lines 32–34. On line 32, total all allowable business-use-of-the-home deductions.
On line 33, enter the total of the casualty losses shown
on lines 10 and 31. Enter the amount from line 33 on
line 27 of Form 4684, Section B. Attach a statement to
your tax return showing how you calculated the deductible
loss (you can use the worksheet as your attachment) and
enter "See attached statement" above line 27 of Form
4684. See the Instructions for Form 4684 for more information on completing that form.
Line 34 is the total (other than casualty losses) allowable as a deduction for business use of your home. If you
24

file Schedule F (Form 1040), enter this amount on line 32,
Other expenses, and enter “Business Use of Home” on
the line beside the entry. Do not add the specific expenses
into other line totals of Part II of Schedule F (Form 1040).
If you are a partner, see Where To Deduct, earlier, for
information on how to claim the deduction.

Part 3—Depreciation of Your Home
Figure your depreciation deduction on lines 35 through 40.
On line 35, enter the smaller of the adjusted basis or the
fair market value of the property at the time you first used it
for business. Do not adjust this amount for changes in basis or value after that date. Allocate the basis between the
land and the building on lines 36 and 37. You cannot depreciate any part of the land. On line 39, enter the correct
percentage for the current year from the tables in Pub.
946. Multiply this percentage by the business basis to get
the depreciation deduction. Enter this figure on lines 40
and 28. Complete and attach Form 4562 to your return if
this is the first year you used your home, or an improvement or addition to your home, for business.

Part 4—Carryover of Unallowed Expenses to
Next Year
Complete these lines to figure the expenses that must be
carried forward to the next year in which you use actual
expenses.

Worksheets To Figure the
Deduction for Business Use of
Your Home (Simplified Method)
Simplified Method Worksheet and the Daycare Facility
Worksheet (for simplified method) in this section are to be
used by taxpayers filing Schedule F (Form 1040) or by
partners with certain unreimbursed ordinary and necessary expenses if using the simplified method to figure the
deduction. If you are filing Schedule C (Form 1040) to report a business use of your home in your trade or business and you are using the simplified method to figure the
deduction, use the Simplified Method Worksheet and the
Daycare Facility Worksheet (for simplified method) in your
Instructions for Schedule C for that business use.
The Area Adjustment Worksheet (for simplified method)
in this section

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A6f5f47c2b7f27d96. Public record. Not legal advice.