"The IRS has announced a simplified option that many owners of home-based
businesses and some home-based workers may use to figure their deductions for
the business use of their homes. The new optional deduction, capped at $1,500
per year based on $5 a square foot for up to 300 square feet, is available
starting with tax year 2013. Though homeowners using the new option cannot
depreciate the portion of their home used in a trade or business, they can claim
allowable mortgage interest, real estate taxes and casualty losses on the home
as itemized deductions on Schedule A. These deductions need not be allocated
between personal and business use, as is required under the regular method.
Business expenses unrelated to the home, such as advertising, supplies and wages
paid to employees are still fully deductible. Further details on the new option
can be found in Revenue
Procedure 2013-13.
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