Rent paid for a space used exclusively for business is fully deductible as an ordinary and necessary business expense. This includes office space, studio space, retail locations, storage units, and co-working memberships. Home office rent is deductible as a percentage of total home square footage.
Getting the deduction right is not just about whether it is allowed — it is about how you set it up.
The space must be used for business. A dedicated office or studio is straightforward. For home offices, the space must be used regularly and exclusively for business.
Keep lease agreements and monthly payment records. For home offices, document the square footage percentage.
Deduct 100% of external office rent on Schedule C. Use Form 8829 for home office rent allocation.
Do not deduct personal rent. Do not deduct a home office that does not meet the exclusive use requirement.
Consider the Augusta Rule -- rent your home to your business for up to 14 days per year, tax-free to you and deductible to the business.
When structured correctly, this deduction can significantly reduce your taxable income.
Here is how this deduction typically works in real situations:
A freelance consultant rents a co-working space for $500 per month.
An S-Corp rents a 1,000 sq ft office for $2,000 per month.
A business owner deducts their full apartment rent claiming they work from home.
Key Takeaway: The difference between a valid deduction and a denied one usually comes down to documentation, usage percentage, and proper structuring. The same expense can be fully deductible, partially deductible, or not deductible at all — depending on how it is handled.
Yes -- 100% of rent for a dedicated business space is deductible. Co-working memberships, office leases, and studio rentals all qualify.
Only the home office percentage. If your office is 10% of your apartment, you can deduct 10% of rent.
Click your profession to see all the write-offs that apply to your full tax profile.
