Question

Delia lives in a 800-square-foot studio apartment. Her rent is $1,700 monthly. She runs her own bakery business and does all of her baking in her kitchen. The kitchen is 200 square feet. She also cooks her personal meals in the kitchen. What percentage of her rent may she deduct as a business-use-of-home expense?

Answer 1

To calculate the percentage of Delia's rent that she can deduct as a business-use-of-home expense, we need to determine the proportion of her apartment that is used for business purposes.

1. Identify the total area of the apartment:

   • Total area = 800 square feet.

2. Identify the area of the kitchen:

   • Kitchen area = 200 square feet.

3. Calculate the percentage of the apartment that is used for the business: \[ \text{Percentage of apartment used for business} = \left( \frac{\text{Kitchen area}}{\text{Total area}} \right) \times 100 = \left( \frac{200}{800} \right) \times 100 = 25% \]

4. Determine the total rent:

   • Monthly rent = $1,700.

5. Calculate the deductible portion of the rent: \[ \text{Deductible rent} = \text{Monthly rent} \times \text{Percentage used for business} \] \[ \text{Deductible rent} = 1,700 \times 0.25 = 425 \]

Thus, Delia may deduct 25% of her rent as a business-use-of-home expense, which amounts to $425 monthly.

In summary, Delia can deduct 25% of her rent for her bakery business based on the percentage of the apartment that is her kitchen space.