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deductible cost.

DETERMINING YOUR DEDUCTION
Once you have a "qualified" space, you are eligible to deduct the costs of heating, cooling and maintaining that space. Figure the amount of square footage allotted to exclusive business use vs. the total square footage of your home and obtain the percentage of space that belongs to the business. Deductions for business use of the home can extend not only to a percentage of heat and electric costs for the space, but you may consider water and sewer costs, repairs, insurance, taxes, and even a portion of the rent or mortgage payments. The IRS has form 8829 and Schedule C for the self employed business owner. If you are an employee who maintains a home office, check out IRS publication 587 and Schedule A.

PROFESSIONAL ADVICE
Now, the wise business owner will have an informative chat with their accountant. If you don't have one, find one. While all these deductions are available to the owner with a home office, this may not be the best choice for all business owners.

There are decisions about capital gains on a residential dwelling, and depreciation of income-producing property. These will have long term ramifications, especially when the time comes to sell your home, and are best decided with professional advice ahead of time. Avoid setting yourself up for a tax liability later in exchange for a home office deduction now. Every penny you spend on professional advice now will save you hundreds of dollars laternot to mention avoiding a lot of aggravation!

RECORD KEEPING
In addition to the home office deduction, keep careful records of office supplies and equipment, modifications made to space to accommodate business use, and all the other deductible expenses a self-employed person has available to them. If any of your deductions get called into question, good records will back you up and make dealing with the IRS as pleasant as possible.

Learn more about this author, Lisa Orme.
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