The Internal Revenue Service released Revenue Procedure 2013-13 which provides a simplified method for claiming the home office deduction. Instead of determining your actual expenses for the home office deduction you can use a safe harbor method, which offers a deduction of $5 a square foot up to a maximum of 300 square feet. You may elect the safe harbor or actual expenses on a year-by-year basis. If you use the safe harbor no depreciation of your home is allowed, but you can still claim mortgage interest and real estate taxes as an itemized deduction on Schedule A without determining an allocaiton of personal vs. business use. The safe harbor method is effective for tax years on or after January 1, 2013. The safe harbor method could be a great opportunity for taxpayers to reduce the administrative burden of the actual expense method as well as potentially increase the deduction.
- Halverson & Company