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Home Office Deduction for Rental Properties

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?

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Attorney answers 3


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.

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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 Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.


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!