Deducting Expenses-Types of Expenses

Deducting Expenses
If you qualify to deduct expenses for the business use of your home, you will also have to
divide the expenses of operating your home between personal and business use.
Types of Expenses
The part of your 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.
Descriptions and examples of direct, indirect, and unrelated expenses are:
Direct (expenses only for business part of your home): painting or repairs only in
the area used for business. These expenses are deductible in full (subject to the
deduction limit). The exception is that they may be only partially deductible in a
daycare facility.
Indirect (expenses for keeping up and running your entire home): insurance,
utilities, and general repairs. Deductibility is based on the percentage of your home
used for business.
Unrelated (expenses only for the parts of your home not used for business): lawn
care or painting a room not used for business. These expenses are not deductible.