Below is from clarkhoward.com. In-home office tax rules change for the better Do you run a business out of your home? Do you work for a company but your office is in your home like many outside sales reps? People who do have been completely befuddled by the tax rules regarding deducting part of your home as an in-home office. The in-home office deduction has had more lives than a cat when it comes to what the tax rules are. The issue got even more confusing when the law was passed making it possible for you to sell your home and pocket all the cash from the gain tax-free. If you deducted part of your house as a part office, when you put your house on the market were you subject to paying tax? Previously the answer was yes. Now, the IRS is saying, no. You are going to be able to deduct the cost of your in-home office, and you wont have to pay a recapture tax when you sell the home. So, basically, people who have a home office are going to have their cake and eat it too. It will take a while for this news to filter through the accounting industry, but youll want to talk with your CPA about it. If you like to handle your taxes on your own, you can find out all about it by going to irs.gov and read Publication 587. And, you are on way!