Can I Deduct My House Rent on My Personal Income Tax Return?

by Mike Parker, Demand Media
    Itemizing your deductions might give you a lower tax bill.

    Itemizing your deductions might give you a lower tax bill.

    Some advantages of renting your home include not having to worry about the bottom falling out of the housing market and the lack of responsibility for paying property taxes. On the down side, there are some tax write-offs that are available to homeowners that renters don't get to take, such as the mortgage interest deduction and the real estate tax deduction.

    Exceptions

    In most cases you can't deduct any part of the rent you pay on your personal dwelling when you file your federal income tax return, but as with most rules there are a couple of exceptions. If you meet certain Internal Revenue Service requirements you might be able to write off a portion of your rent as either an employee business expense or as a home office business deduction.

    Business Use of Home

    The rules for deducting business use of your home apply regardless of whether you use your home for business purposes as an employee or as a self-employed individual. You can deduct the proportionate share of your rent provided you used part of your home regularly and exclusively as either your principal place of business or the place where you meet with clients in the normal course of business or if there is a separate structure not attached to your home that you use in connection with business.

    Employee Business Expense

    If you used your home for business purposes as an employee, you must itemize your deductions on Schedule A to write off the qualifying portion of your rent. Include the pro rata share of your rent with your other unreimbursed employee business expenses and add them to your miscellaneous expenses. These expenses are subject to the IRS's 2 percent rule. You can deduct only the amount of these expenses that exceed 2 percent of your adjusted gross income.

    Self-Employeed Expenses

    If you used your home for business purposes as a self-employed individual, you must report your business use of home expenses, including a pro rata share of your rent, on Schedule C. There is no 2 percent limitation on Schedule C, and you can deduct the appropriate portion of your rent whether you itemize your deductions or claim the standard deduction.

    About the Author

    Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.

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