Which Home-Based Expenses Are Legitimately Deductible for a Rental or Side Venture?
Home-based deductions aren’t guesswork. The IRS cares about intention and documentation. Nail “ordinary and necessary” + business share and claim what’s yours.
Summary of What This Blog Covers
- Ordinary and necessary rule with examples
- Percentages for internet/mobile
- Home-office framework
- Documentation habits
The Ordinary and Necessary Rule
Ordinary = common in your trade. Necessary = helpful and appropriate. Test every expense: “Does this help my rental/side venture in a sensible way?”
Defensible Percentages for Internet and Mobile
Logs + purpose → reasonable %. 40–70% common. Document method and round down if unsure.
Practical Home-Office Framework
Exclusive + regular use = deductible. Simplified ($5/sq ft) or actual (prorate rent/utilities). Sketch + photos + utility totals.
Documentation Habits and Systems
Evidence Packs: receipts + short notes + allocation method. One folder per category, monthly review.
Home-Based Deduction Checklist (copy-paste)
☐ Ordinary/necessary test passed
☐ Internet/mobile % method documented
☐ Home-office sketch + photos
☐ Evidence Packs built (receipts + notes)
☐ Proration math saved
Book Your Deduction Review
Insogna reviews your expenses, sets defensible percentages, builds Evidence Packs, and hands you a home-office memo. Whether you searched “tax preparation services near me,” “tax advisor Austin,” or “CPA in Austin for rentals,” we make deductions defensible and audits boring.
Frequently Asked Questions
1) What’s a reasonable internet/mobile %?
Base on logs. 40–70% common. Document and be consistent.
2) Simplified or actual home office?
Simplified = easy ($5/sq ft). Actual = bigger if high costs.
3) Rental property home office?
Yes if regular/exclusive. Track time + space.
4) What if I rent my home?
Prorate rent payment as expense. No depreciation.
5) How to prove “business purpose”?
Short note on receipt: date, what, why business.
