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A home office has a wide variety of benefits to recommend it. In addition to a commute that shifts from miles to footsteps, it offers a variety of tax advantages. But you need to ensure that you’re staying within IRS regulations, or the potential boon could turn into a serious problem.

“To be deductible, any business expense must not be capital in nature and has to be related to the business, occur in the proper tax year and be ordinary, necessary and reasonable,” says Jeffrey S. Levine, CPA, MST, principal at Alkon & Levine, PC. “To deduct a home office, the need for an office should be present. Court cases and tax code now allow an office, if the business has no other place to reasonably keep administrative records and activities necessary for running and administering the business. For the most part, as long as you don’t have an office elsewhere, a home office is more easily accepted than in the past. However, the use of that office space must be exclusively for the business, or to see clients or to store inventory. So, there’s no sharing the kitchen table with your family and the business. Even if the space is just half of a room, that half must be exclusively for use as an office.”

As far as the tax advantages, you can deduct prorated amounts of mortgage interest and real estate taxes, rent, insurance, repairs, heat, water and electric and other reasonable costs, like condo fees (you can even deduct a portion of cleaning fees). As far as prorating expenses is concerned, just measure the square feet of the space used for your office and divide it by the total square footage of living space in your home; expenses are prorated by that ratio. “A home office may also allow you to deduct more of your car usage, since trips you take when leaving your office could be longer business trips, rather than commuting to an office first,” Levine adds.

A key issue in putting the home office together is making sure you’re clearly separating it from your home. Keep good records that show how you calculated your space, keep a picture of the office with your tax documents and be wary of too much repair or utility costs. Levine also warns against “double-counting” items prorated on both your home office tax form (Form 8829) and on itemized deductions in your 1040 Schedule A Form.

“If you have a legitimate office space,” concludes Levine, “don’t be scared to use the deduction. It counts, so take it.”

If you have any questions about correctly setting up your home office, speak with your accountant or tax attorney. To learn more, check out IRS Publication 587, Business Use of Your Home.