Home Office Move-Year and Two Homes Guide (2025-2026)
Deduction substantiation path
How to support a deduction from the statute down to the records behind it.
Confirm the deduction is allowed
The expense must meet the statutory ordinary-and-necessary test.
Tie it to the activity
Connect the expense to the US trade or business or income it supports.
Keep contemporaneous records
Receipts, invoices, and logs that prove the amount and purpose.
Claim on the return
Report the deduction where the form and instructions direct.
Key Takeaways
- In a year with two homes, you can use the simplified method for only one home.
- Partial-year home-office use is measured with average monthly allowable square footage.
- Months with less than 15 days of qualified use are treated as zero under the simplified method.
- The gross-income limitation still restricts the final deduction.
A move year breaks the easy 300-square-foot assumption
Publication 587 explains that if you used more than one home in the business during the year, you can elect the simplified method for only one of those homes. Any additional home must be figured using actual expenses. That point catches many founders off guard because they assume the simplified method follows them seamlessly through a relocation.
The IRS treats the move-year geometry as part of the deduction. The method choice is not automatically portable across both homes.
Average monthly square footage matters in partial-year use
Publication 587 says that when the qualified business use is only for part of the year or the area changes during the year, the deduction is limited to average monthly allowable square footage. It also says you cannot count more than 300 square feet for any one month and a month with less than 15 days of qualified business use is treated as zero.
This is why a founder who started the home office in July often gets a much smaller simplified deduction than the headline $1,500 amount.
The gross-income limit still applies
Publication 587 also states that the home-office deduction is limited to gross income from the qualified business use reduced by business deductions that are unrelated to the use of the home. So even the simplified method is not a universal add-on. If the business itself is already at or below zero after other expenses, the home-office deduction can collapse.
That means the move-year analysis should combine timing, area, and net-income limits, not just square footage.
Frequently Asked Questions
Can I use the simplified home-office method for both my old home and new home in the same year?
No. Publication 587 says you can elect the simplified method for only one home used in the business during the year.
Why is my move-year simplified deduction lower than 300 square feet times $5?
Because Publication 587 uses average monthly allowable square footage and limits months with brief use.
Can a home-office deduction create or deepen a business loss?
Not in the ordinary way. Publication 587 applies a gross-income limitation that can reduce or eliminate the home-office deduction.
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