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.
The following table describes the types of expenses you may have and the extent to which they are deductible.
| Expense | Description | Deductibility |
| Direct | Expenses only for the business part of your home. Examples: |
Deductible in full.* Exception: |
| Indirect |
Expenses for keeping up and running your entire home. Examples: |
Deductible based on the percentage of your home used for business.* |
| Unrelated |
Expenses only for the parts of your home not used for business. Examples: |
Not deductible. |
*Subject to the deduction limit, discussed earlier.
 |
Form 8829 (pdf) and the deduction worksheet have separate columns for direct and indirect expenses. |
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.
Types of Expenses
Examples of Expenses
Information courtesy of the Internal Revenue Service.
