http://www.irs.gov/publications/p535/ch01.html
Business use of your home. If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.
To qualify to claim expenses for the business use of your home, you must meet the following tests.
The business part of your home must be used exclusively and regularly for your trade or business.
The business part of your home must be one of the following.
Your principal place of business.
A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business.
A separate structure (not attached to your home) you use in connection with your trade or business.
You generally do not have to meet the exclusive use test for the part of your home that you regularly use in either of the following ways.
For the storage of inventory or product samples.
As a daycare facility.
Your home office qualifies as your principal place of business if you meet the following requirements.
You use the office exclusively and regularly for administrative or management activities of your trade or business.
You have no other fixed location where you conduct substantial administrative or management activities of your trade or business.
Alternatively, if you use your home exclusively and regularly for your business, but your home office does not qualify as your principal place of business based on the previous rules, you determine your principal place of business based on the following factors.
The relative importance of the activities performed at each location.
If the relative importance factor does not determine your principal place of business, you also can consider the time spent at each location.
For more information, see Publication 587.