What is the home office deduction?

It's a tax deduction for the portion of your home used exclusively and regularly for business. Both the IRS (US) and CRA (Canada) allow it for self-employed individuals and freelancers.

What's the difference between the simplified and regular method?

The simplified method (US: $5/sq ft up to 300 sq ft) is easier but caps at $1,500. The regular method calculates actual costs proportionally and often yields a larger deduction for larger homes.

Can I claim the home office deduction if I rent?

Yes. Both renters and homeowners can claim it. Renters deduct a percentage of rent; homeowners can also include mortgage interest, property tax, and depreciation under the regular method.

Do I need a dedicated room for the home office deduction?

The IRS requires the space be used exclusively and regularly for business—though it does not need to be a separate room. A clearly defined work area can qualify.

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Feb 14, 2026 · 4 min read

The Home Office Deduction Most Freelancers Miss

If you work from home — even part of the time — you're probably leaving money on the table. The home office deduction is one of the most valuable write-offs for solo entrepreneurs, and one of the most under-claimed.

Two methods. Pick the bigger number.

Simplified method

US (IRS): $5 per square foot, max 300 sq ft. That's up to $1,500. No receipts, no calculations. Just measure your office space.

Canada (CRA): The flat rate method gives you $2/day for each day worked from home, up to $500/year. Again, no receipts needed.

Regular method

Calculate the percentage of your home used for business (by square footage), then apply that percentage to actual housing costs: rent or mortgage interest, utilities, insurance, property tax, repairs.

Example: Your office is 150 sq ft in a 1,200 sq ft apartment. That's 12.5%. If your annual rent + utilities = $24,000, your deduction is $3,000. Double what the simplified method gives you.

Deduction comparison — 150 sq ft office in a $2K/mo apartment

Simplified method$1,500

Regular method$3,000

In this scenario the regular method saves an extra $1,500/year.

Which one should you use?

Do the math both ways. Seriously. It takes 10 minutes.

If your office is small and your rent is low, the simplified method might win. If you live in an expensive city — New York, Toronto, Vancouver — the regular method almost always comes out ahead. Sometimes by thousands.

The catch

The space must be used regularly and exclusively for business. Your kitchen table where you also eat dinner doesn't count. A dedicated desk in a corner of your bedroom? That works.

Key takeaway

Calculate both methods every year. Your rent changes, your office size changes. The winner may flip from one year to the next.

Related tools

Expense Logger

Track housing costs to calculate your regular method deduction.

Profit & Tax Calculator

See how the deduction impacts your estimated tax bill.

This isn't tax advice. Consult a tax professional for your specific situation.