Is Home Office Furniture Tax Deductible? 3 Ways to Tell If Yours Is

It's a question that every home-based business owner has - "what kind of tax deductions can I take?" If you have gone out and bought a bunch of home office furniture for your new venture, there's a good chance that you can take it all as a tax deduction.

When you deduct home office furniture, you can do it in one of two ways:

• You can deduct the total cost of the furniture all at once
• You can deduct a portion of the cost over 7 years, in a process called "depreciation"

But in order to tell if your home office furniture is tax deductible to begin with, it needs to meet the following guidelines:

1. It must be used for business only

If you bought a new couch for your living room that clients occasionally sit on, chances are it's not tax deductible. In order for your home office furniture to qualify as a tax deduction, you have to define the term "home office" the same way that the IRS does - as a space that is completely devoted to your business. If you use the area (or the furniture) for other things - like as a guest room or as a playroom for the kids - then it's not going to count.

But you don't necessarily have to work from home to qualify for a home office furniture tax deduction. If, for example, you run your company out of a traditional office - but bought a file cabinet to store important business papers at home - you can legally deduct the cost of the file cabinet.

2. It needs to come with good records

If you ever get audited, you will have to shoulder the burden of proof - meaning that you will have to prove to the IRS that you were right to take your home office furniture as a tax deduction. The only way to ever prove your case is to keep records that show how much you paid or records that prove that you really needed the piece of furniture for business purposes. Otherwise, you could very well be out of luck.

3. It needs to make sense

A good way to raise a red flag with the IRS is to do things that don't make sense. When it comes to deducting home office furniture, a common mistake that people make comes from computers. In order to take your computer, computer desk, or computer accessories as tax deductions, you will need to be able to prove that they are solely the property of your business. But if you have a family of 4 and only one computer workstation, you are going to have a hard time proving to the IRS that it's all for business purposes - and that your husband doesn't play games on it, or that your kids don't use it to do their homework.