Have you struggled to find a pre-built home with a home office that fits your needs and budget? If so, that’s not surprising — according to the US 2017 Census, there was a spike in the number of bedrooms in homes built in the early 2000’s, but most homes built recently have fewer bedrooms. This is due to a combination of an increasingly childless demographic, pre-built homes falling victim to open-floor plan design trends, and the rising costs of real estate per square foot. Plus, when you factor in the fact that used homes can come with a bunch of hidden costs and problems, compromising on your vision of a home office can make any home search a real downer. If your dream home includes an office (or two), NewHomeSource did some of the homework on how to get the most out of your, well, home work.
The Laws Surrounding Home Offices
First things first – what, exactly, legally constitutes as a home office? In accordance to the IRS, you can file for a home office deduction if:
- Your home office has regular and exclusive use AND
- It is the principal place of your business.
These rules apply to both free-standing structures (such as a studio or a garage) as well as extra rooms in your home. Some things to note: If your home office is not your primary place of business (such as a corporate headquarters) but you still operate a substantial amount of business from home (including meetings with clients, patients, or customers), you are able to file for the home office deduction.
In 2018, home office tax deductions underwent a major change— those who work at home for an outside employer can no longer claim out-of-pocket expenses; e.g., binders, phones, etc. If this change has impacted you, perhaps it’s time to negotiate reimbursement directly from your employer. Those that run small businesses out of their homes can still deduct business-related expenses (ultra-fast internet, printers, etc.).
Under the simplified (and most commonly used) version of the home office deduction, those who work at home are eligible for a $5 per square foot (up to 300 square feet) write-off from their mortgage/rent, as long as the space follows the guidelines mentioned above. If your builder is crafty, you can maximize your office space without expanding your overall sq. footage, which may offset upfront costs of customization in the short-term, and decrease your mortgage costs long-term.
Is Having a Home Office Beneficial?
When you work remotely, you essentially have two options: a home office or a coworking space. How do you determine which is a better fit? Here are some things to consider before making your decision:
Are You Client-Facing?
If so, how would a coworking space affect your clients’ perception of you if you were to arrange a meeting? For most client-facing employees, the polish of a home office is hard to beat, especially if client meetings are of a sensitive nature. Booking conferences in a coworking space can be a hassle and possibly even an additional expense.
Productivity vs Motivation
If you’re a solo-treneur, being in a coworking space might be an environment that’s more conducive to work, even if it’s a greater expense. That said, if you’re working on behalf of another employer or are easily distracted, a home office is both lower-cost and a better fit overall.
Are You Really Working Alone?
Maybe you have a child, parent, or even a pet that needs you at home. While there are coworking spaces that are expanding to fit the needs of parents (of both the young and furry variety), these present additional costs that add up in the long-term and can cause unnecessary stress. Hiring a sitter, caregiver, or a dog-walker occasionally if you’re managing a heavy workload at home is a possibly more budget-conscious option.
A Need for Separation
Under the law, your home office is only meant to be used for business. However, it’s still in your home. If you’re one of the many that struggle with “taking their work home with them” it’s important to recognize this as a problem and take steps to prevent a 24-hour workday. That might mean working with your builder to make your home office feel not only physically separated from the rest of your home, but also mentally separated – or ultimately deciding working from home is not for you.
Is it an Option?
Perhaps most importantly, you need to see if your builder is willing to customize your floor plan to include a home office. The majority of builders that partner with NewHomeSource pride themselves on their customization and modernization options (which include the ability to house robust internet and energy-drawing appliances). The level of flexibility does vary from builder to builder, though, so it’s important to state that a home-office is a must-have in your newly built home.
There’s no one-size-fits-all answer, but when you’re shopping for a new home, you have the advantage of not having to compromise on the home office (and overall home!) of your dreams. Ensure that your chosen builder can work with your vision and can maximize the space to give you the greatest tax deductions come April. Need design tips for your home office? Check out this article on the items you need for a fully functional home office.