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The simplified method sidesteps this entirely: because no depreciation is claimed under the simplified method, there is no recapture when the home is sold.
| Factor | Simplified Method | Regular Method |
|---|---|---|
| Calculation | $5 × sq ft (max 300) | Actual expenses × business % |
| Maximum deduction | $1,500/year | No cap |
| Recordkeeping | Minimal (just sq footage) | Extensive (all home expenses) |
| Depreciation taken? | No | Yes (creates recapture risk) |
| Best for | Small offices, plan to sell home | Large offices, high home costs, long hold |
| Can switch methods? | Yes, year to year | Yes, year to year |
Regardless of which method you choose, maintain the following records:
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Yes. An STR host who uses a dedicated space in their home exclusively and regularly to manage their short-term rental business qualifies for the home office deduction under IRC §280A(c)(1). The space must be used exclusively for STR management — responding to guests, managing listings, maintaining records, coordinating cleaners — and no other purpose.
The simplified method (Rev. Proc. 2013-13) deducts $5 per square foot of home office space, capped at 300 square feet for a maximum deduction of $1,500. The regular method deducts actual home expenses (mortgage interest, rent, utilities, insurance, depreciation) multiplied by the percentage of your home used for business. The regular method often yields a larger deduction but requires more recordkeeping and creates depreciation recapture risk upon sale.
No. The home office deduction under IRC §280A(c)(1) applies only to the space in your personal residence where you manage the STR business — a dedicated desk, room, or workspace in your home. It does not apply to the STR property itself, which is deducted separately as a rental property with its own direct expense deductions on your tax return.
When you sell your personal residence, you normally exclude up to $250,000 ($500,000 married) of gain under IRC §121. However, the portion of your home claimed as a home office under the regular method is subject to depreciation recapture taxed at up to 25%. The simplified method avoids this recapture risk because no depreciation deduction is taken.