Today, lots of people work at home. One of the best tax deductions
for home workers is the home office deduction. It allows you to deduct a
portion of your rent or home mortgage expense, plus utilities, if you
use a part of your home as a business office. However, your business
must earn a profit to actually take the deduction (if you incur a loss,
the deduction is carried forward to future years).
constitutes a “home” for purposes of the home office deduction is
broadly construed. It includes a regular house, apartment, condominium,
or mobile home, or even a boat in which you live. But what about an RV
(recreational vehicle)? Can you take a home office deduction for an
office in an RV?
In a case that ended up in tax court, the court said no.
case involved a couple who paid $283,494 for an RV back in 2002. This
was a good-sized RV: It had a sleeping area, a bathroom, and a
kitchenette with a countertop. Across the vehicle from the kitchen
counter was a second countertop that the husband used as a desk, and on
which he had a computer and office supplies.
operated a consulting business together. They had a home in Illinois,
but spent half of 2005 and all of 2006 travelling in their RV. They
worked at their business while they travelled. They claimed a home
office deduction of almost $6,000 for 2005 and over $9,000 for 2006. The
IRS denied both deductions and the tax court agreed.
qualify for a home office deduction, a business owner must use a portion
of a dwelling unit regularly and exclusively for business purposes. The
tax court found that this couple had failed to prove that there was an
identifiable portion of their RV that was used exclusively for business
purposes. The area they claimed constituted the home office was the
countertop that the husband used as a desk. But the court said that it
was simply not believable that “in the cramped quarters of a motor home,
an unclosed area like the countertop would somehow be exclusively
reserved to business activity.” (Dunford v. Comm’r, T.C. Memo 2013-189
is not the first time that a taxpayer with a small living space has
been denied a home office deduction. A psychologist who lived in San
Francisco, claimed a home office deduction for one-quarter of her
apartment. However, the entire apartment was a 400-square-foot studio,
consisting of an open area (approximately 13 feet by 15 feet) furnished
with a desk and a couch and a small dining area and kitchen (each
approximately seven feet by eight feet). Given the layout of this tiny
apartment, the court wouldn’t buy the taxpayer’s claim that she used 100
square feet exclusively for business. (Mullin v. Comm’r
, TC Memo 2001-121.)