Home Office Deductions: Garages

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Do you get a tax break for having a home office? ​

Another area of the house to consider is your garage space. Is this included or excluded from your business use percentage calculations?


A taxpayer received a 78 percent office deduction on his home. That's a respectable proportion, but what's more intriguing is how the court viewed the taxpayer's home in determining the 78 percent business use. 


The following is how the court arrived at the 78 percent business use of the home:

• The garage was counted as office space by the court because there was no legal or factual justification for its exclusion. (The taxpayer's firm required 3 large pieces of Equipment to be housed in the garage.)
• The court ruled that the utility room in the basement, which housed the water heater and furnace, did not meet the exclusive business-use criteria for the home-office deduction and thus classified as personal space.
• There were only 100 square feet of usable space in the attic, which totaled 1,128 square feet. The remaining 1,028 square feet were deemed unusable by the court because they were inaccessible due to the roofline's slope and/or the lack of flooring.

Worth Noting. The activity took place in the garage, but the IRS claimed that such space was not useable and therefore excluded it in the calculations. However, the court and the taxpayer agreed that space where business activity is performed, should be factored into the computations. Will this be the case in other garages as well.

According to the court, only the den meets the regular and exclusive use requirements for certification as a home office. 

The court employed the number-of-rooms method to compute the business proportion, determining that one of the 5.5 rooms (the den) represented the home's business-use percentage. Thus, despite the taxpayer's attempts to claim the garage as office space, the court ignored it. 

Here is a case of the two garages. The court combined two distinct massage facilities, in which each business used a garage.  

The IRS eliminated the garages from its calculations in both of these court decisions. 


The court, on the other hand, was of the opposing opinion. For starters, the business-use-of-home calculations included both garages. One garage may meet the standards for the home-office deduction while the another does not, even with the same measures.


As you can see, the garage offers several options for a home office deduction. If you're interested in discussing more your garage, don't hesitate to get in touch with us.

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