Home Office Deduction for Rental Properties

Asked over 2 years ago - San Jose, CA

I have 5 rental properties and have a home office for the rental activities. I also work as a W-2 employee.

My question - Should I take a home office deduction in schedule C? Will it be audited because there no schedule C income every year and only home office deduction?

Attorney answers (3)

  1. Matthew Jason Staub

    Contributor Level 12

    5

    Lawyers agree

    Answered . The home office deduction is limited to the gross income derived from your business. If you have no Schedule C income than you cannot take the home office deduction because you have no income to offset.

    Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this... more
  2. Curtis Lamar Harrington Jr

    Contributor Level 20

    5

    Lawyers agree

    Answered . In addition to Attorney Staub's excellent point, even where justified many people forego the depreciation expense as it complicates re-sale of the home later on.

    Also pause and think about your active / passive posture.

    Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal... more
  3. David S Hoffman

    Contributor Level 13

    2

    Lawyers agree

    Answered . This is really a tax question, not a real estate question. Your CPA or tax attorney should be able to answer this. If you do not have one, (and with 5 rental properties, you should!), you need to get one on retainer sooner rather than later.

    Good luck!

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