Updated October 18, 2026. Quick answer: Part III figures depreciation of your home: the smaller of your basis or the value on line 37, less land, times the business percentage, times a depreciation percentage from the instructions. Line 42 carries the result to line 30. Part IV figures what you could not deduct and can carry over to 2026.
Related reading on this site: IRS Publication 587.
Line 37: the home’s basis or value
The caption is “Enter the smaller of your home’s adjusted basis or its fair market value. See instructions”. The instructions say “Enter on line 37 the cost or other basis of your home (including land), or, if less, the fair market value of your home on the date you first used the home for business.” They add “Do not adjust this amount for depreciation claimed or changes in fair market value after the year you first used your home for business.”
Lines 38 to 40: land, building and business basis
Line 38 is captioned “Value of land included on line 37”. The instructions say “Enter on line 38 the cost or other basis of the land on which your home sits, or, if less, the fair market value of the land on the date you first used the home for business.”
Line 39 is captioned “Basis of building. Subtract line 38 from line 37” and line 40 is captioned “Business basis of building. Multiply line 39 by line 7”. As a computed illustration, not an IRS example: if line 37 were 200,000 dollars and line 38 were 50,000 dollars, line 39 would be 150,000 dollars. If line 7 were 0.10, line 40 would be 15,000 dollars.
Additions and improvements are handled separately: “Attach your own statement showing the cost or other basis of additions and improvements, used at least partially for business, that were placed in service after you began to use your home for business.” “Do not include any amounts on lines 37 through 40 for these expenditures. Instead, see the instructions for Line 42.”
Line 41: the depreciation percentage
Line 41 is captioned “Depreciation percentage (see instructions)”. The percentage depends on when you first used the home for business, and the instructions give it in tables by month for 2025 and by earlier periods. Use the Line 41 tables in the instructions for the number; this page does not copy them. For the simplified method the instructions say “If you used the simplified method for 2024, use the preceding table to find the percentage to enter.”
Line 42: depreciation allowable
The caption is “Depreciation allowable (see instructions). Multiply line 40 by line 41. Enter here and on line 30 above”. The instructions say “If no additions and improvements were placed in service after you began using your home for business, multiply line 40 by the percentage on line 41. Enter the result on lines 42 and 30.”
If there were additions, “Attach a statement showing your computation and include the amount you figured in the total for line 42.”
Form 4562 and Schedule C line 13
The instructions say to complete Form 4562 only in two cases. The first is “You first used your home for business in 2025, or” and the second is depreciating additions and improvements placed in service in 2025. For a first-year home: “enter the amounts from Form 8829, lines 40 and 42, in columns (c) and (g) of line 19j on Form 4562.” Then “Do not include the amount from Form 8829, line 42, on Schedule C, line 13.” See Form 4562 and Schedule C lines 12 and 13 for those forms.
Part IV: carryover to 2026
The Part IV heading is “Carryover of Unallowed Expenses to 2026”. The instructions say “If your expenses are greater than the current year’s limit, you can carry over the excess to 2026.” “The carryover will be subject to the deduction limit for that year, whether or not you live in the same home during that year.”
Line 43 is captioned “Operating expenses. Subtract line 27 from line 26”, and the instructions say “If the result is zero or less, you have no amount to carry over.” Line 44 is captioned “Excess casualty losses and depreciation. Subtract line 33 from line 32”, with the same instruction. Next year’s lines 25 and 31 ask for these two amounts from the prior Form 8829.
Where the number comes from
The basis and land values come from your records of what the home cost, or its market value on the date you first used it for business. The depreciation percentage comes from the instructions’ tables. Lines 43 and 44 are subtractions of earlier lines on the form, covered on the lines 16 to 27 and lines 28 to 36 pages.
Where it goes next
Line 42 goes back to line 30, as the caption says. Line 30 then flows through lines 32, 33, 34 and 36 to Schedule C, line 30. The next year’s carryover lines are covered on the lines 16 to 27 page (line 25) and the lines 28 to 36 page (line 31).
Edition and line numbers
This page reads the 2025 Form 8829, Expenses for Business Use of Your Home and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. The form’s own header says “File only with Schedule C (Form 1040).” Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently.
Common mistakes
- Adjusting line 37 for depreciation already claimed. The instructions say “Do not adjust this amount for depreciation claimed or changes in fair market value after the year you first used your home for business.”
- Putting the home depreciation on Schedule C line 13. The instructions say “Do not include the amount from Form 8829, line 42, on Schedule C, line 13.”
- Counting improvements on lines 37 to 40. The instructions say “Do not include any amounts on lines 37 through 40 for these expenditures.”
Related: Form 8829, Form 4562, Schedule C lines 12 and 13, Schedule C line 30, and Form 8829 lines 28 to 36.
Sources
- Instructions for Form 8829, Expenses for Business Use of Your Home (2025): https://www.irs.gov/pub/irs-pdf/i8829.pdf
- Form 8829, Expenses for Business Use of Your Home (2025): https://www.irs.gov/pub/irs-pdf/f8829.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.