What this line means
The total square footage of your entire home. This includes every room, hallway, closet, and finished space in the house — not just the rooms you use daily. It is the denominator in the business-use percentage calculation. Line 1 (your office area) divided by line 2 (your total home area) gives you the percentage on line 3 that drives every deduction on this form.
Does this apply to you?
- You are completing Form 8829 to claim the home office deduction using the regular method
- You need to establish what percentage of your home is used for business
- You own or rent a home where you operate your business from a dedicated space
Easy to overlook
Unfinished spaces are generally excluded Your unfinished basement, unfinished attic, or attached garage (unless you use it for business) typically should not be included in the total square footage. Including unfinished space inflates the denominator and shrinks your business-use percentage, costing you money. Only count finished, livable areas of your home. 1 IRS Form 8829 instructions — Line 2
Apartment dwellers use the apartment’s total area, not the building’s If you rent an apartment, line 2 is the total area of your unit — not the entire apartment building. This sounds obvious, but some filers second-guess the number when their lease lists the building’s total square footage. Your unit is what matters. 2 IRS Publication 587 — determining total area for business-use percentage
Watch out for this
Understating your total home area to inflate the business-use percentage. If your home is 2,000 square feet and you enter 1,500, your 200-square-foot office looks like 13.3% instead of 10%. The IRS can verify your home’s square footage through property records, and an inconsistency triggers closer examination of the entire form.
Footnotes
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IRS Form 8829 Instructions, Line 2. https://www.irs.gov/instructions/i8829 ↩
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IRS Publication 587, Business Use of Your Home, Figuring the Percentage. https://www.irs.gov/pub/irs-pdf/p587.pdf ↩