Home-Office Update

The rules on home-office deductionsare so complex that many taxpayerschoose not to wave a red flag in front ofthe IRS and never claim the write-off. Plus,if you sell, the percentage of the home thatyou have claimed as a home office isbacked out of the tax-free profit you'reallowed on the sale. If you use 10% ofyour house as a home office, for example,you would owe taxes on 10% of any gainwhen you sell the house. Now the IRS hasruled that, as long as the home office isactually in your house and not in adetached structure like a garage or a guesthouse,you're entitled to the full exclusion.Under current rules, you can make aprofit of up to $500,000 on the sale ofyour principal residence if you're marriedand file a joint return, or $250,000 ifyou're single, without paying any tax.