If your home is the hub of your whole professional activity, expenses incurred maintaining an office at home are fully deductible. By deducting home office expenditures as business expenses, you may minimize your taxable income and reach a smaller tax burden.
When can I deduct expenses related to home office?
Various professional and spatial conditions must be met in order to be able to deduct the costs of an office at home.
- It must be your primary workplace. We all have different professional lives and we sometimes need to work outside the home. The Finanzamt will consider your home office as a central place of work if you work there more than 50% of your time AND you don’t have another workplace at your disposal (like a coworking space for example.)
- It must be used exclusively for work purposes. In an office, you primarily do intellectual, written, administrative, creative or organizational work. You must, however, use it almost entirely for professional or business purposes. A maximum of 10% subordinate private use is permitted. If the room is used privately more than 10% of the time, no deduction is possible – not even partially.
- It must be suitably fitted – The room must be equipped adequate for your work and not contain any other unrelated private things, like a bed, children toys or sports equipment.
- It must be connected but separated from your household – Due to its location, function, and equipment, the room should be integrated into your private sphere, i.e. it belongs to your private flat or house. Rooms that do not correspond to an office in terms of furnishings and function, such as business, storage, or exhibition rooms, are excluded. A work corner is insufficient; a separate room is required. In addition to the home office, there must be enough living space as well.
The Finanzamt can check if those requirements are met by sending in a questionnaire, so you can certify you fulfill all of them.
Which costs can you deduct?
You can deduct those expenses as part of your home office expenses:
- Rent
- Water supply
- Sewage
- Electricity & gas bills
- Cleaning costs
- Fees found to your “Nebenkosten”: Property tax, garbage collection fees, chimney sweep fees, tenants’ association fees (for owners: house and property owners’ association), occupancy tax
- Household insurance
- For property owners:
- Legal insurance for property owners, and renovation costs that afflict the building or condominium
- Building depreciation instead
- Debt interest on loans
- Constructions or repair costs.
- Homeowners’ insurance.
For most of those, you will need to divide these pro rata – according to the area of your home office to the total living area (including home office space). This means that if you live in a 100sqm home and your home office is 10sqm, you can deduct 10% of the expense (e.g: rent)
Don’t forget to include the costs of furnishing your office, such as shelves, a desk, or an office chair, as business-related expenses. These expenses are fully deductible too. The only condition is that you use these items almost exclusively for professional or business purposes. You can immediately deduct items up to 952 euros (VAT included). Anything above that amount, you will need to depreciate them over several years (Abschreibung).
Where do I enter those expenses in my yearly tax declaration?
For self-employed persons, those costs are assigned as business expenses. You will assign them to “Betriebsausgaben” in the form “Anlage S”.
Keeping track of those expenses can be tricky. Thankfully, using an app like Accountable makes it easy. You are sure to assign those expenses in the right categories, making your life much easier when it comes to doing your tax return yourself, or with a Steuerberater.
You can find a detailed guide on deductible expenses for your tax return in Germany here.
