In the past taking a home office deduction was like sending up a red flag to be audited by the IRS. You can claim home office expenses if an area of your home is used exclusively for work and is you primary place of business. This deduction is a double edged sword however. If you sell your home for a profit,and have lived in it for three out of the last five years, you can exclude $500,000 of gain if you file married filing jointly. The business portion of your house that you have been deducting as a home office does not qualify for this exclusion and is taxable as ordinary income. Thus, the tax benefit of prior years is reversed upon sale of your residence. THINK LONG AND HARD BEFORE DEDUCTING A PORTION OF YOUR RESIDENCE