Can I Write Off the Office I Leased If I'm Working Locums at Their Site?
The bridge year nobody plans for: the practice did not survive, the lease did, and the locum work happens in someone else's building. Here is the honest sorting of what deducts where.
A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners
Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated August 19, 2026.
The short answer
Probably not against the locum income, and pretending otherwise is how clean returns go bad. An office rented for your private practice is an expense of that activity: while the practice operated, deductible there; while it winds down, still deductible there, including a lease termination payment. But your 1099 locum business, performed at the hospital’s facility, has no ordinary-and-necessary use for a clinical office across town, so the rent does not convert into a locum deduction just because the locum income is what remains. The good news: the wind-down deductions are real, and a legitimate home office covers the admin side going forward.
Two activities, one checkbook: the sorting that matters
The bridge-year fact pattern arrives on our desks every season: a physician launched or bought into a practice, leased space, the economics failed, and locum work became the income while the lease kept billing. Emotionally it is one story. On the return it is two activities, and every dollar has to pick one:
- The practice (winding down): its rent, utilities on its space, its malpractice runoff, disposal of its equipment, and any lease termination payment are expenses and losses of the practice, deductible on its final schedules as the business terminates. A real business that failed gets its costs respected on the way out.
- The locum activity (operating): its own malpractice, licenses, credentialing, qualifying travel and mileage, and the administrative home office. What it does not include is the rent on a clinical space it never uses; "ordinary and necessary" is measured against the business you are actually running, and the hospital provides your worksite.
Where taxpayers get in trouble is the tempting middle: allocating the dead office to the living income because that is where the deduction would help. An examiner asks one question, what did the locum business use this office for?, and "storage of my former practice’s furniture" does not carry the rent.
| Cost in the bridge year | Deductible? | Against which activity |
|---|---|---|
| Office rent while the practice operated | Yes | The practice |
| Rent during a genuine, active wind-down period | Generally yes | The practice’s final period |
| Lease termination / buyout payment | Generally yes | The practice |
| Rent on space held "in case I restart someday" | Weak to no | Neither; dormant hope is not a trade or business |
| Home office for locum scheduling, billing, records | Yes, if regular and exclusive use | The locum activity |
| Locum malpractice, licenses, credentialing, qualifying travel | Yes | The locum activity |
Getting every dollar the rules actually allow
The honest "no" on the office comes packaged with several honest yeses. Terminate the lease properly and the buyout deducts. Close out the practice’s books and its final-year losses do their work against your other income, subject to the usual loss rules. Equipment sold at a loss, unamortized startup costs, professional fees for the shutdown: all belong in the wind-down file. The bridge year usually contains more legitimate deduction than people expect, just not the one they asked about first.
Then build the locum side clean from day one: the standard setup, a qualifying home office for the admin core, and mileage handled under the temporary work location rules, which, incidentally, a legitimate home office strengthens. A locum year run properly deducts plenty without borrowing expenses from a closed business.
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Frequently Asked Questions
Can I deduct office rent against my 1099 locum income?
Only if the office is ordinary and necessary for the locum business itself, and for most locums working at the hospital’s site, a leased clinical office is neither. An office serving a different activity, like a private practice you paused or abandoned, is not converted into a locum expense by wishful allocation. The honest answer for the classic bridge-year fact pattern is: probably not against the locum income.
What happens to the rent on an office for a practice that failed?
Expenses of a real trade or business remain deductible as that business winds down: rent through the termination of the lease, costs of closing, and any lease buyout are generally business expenses or losses of the practice activity. The distinction that matters is between winding down a genuine business (deductible against its final Schedule C) and holding space for a hoped-for future one (much weaker ground).
Does a lease termination or buyout payment count as a deduction?
A payment to terminate a business lease early is generally deductible as a business expense of the activity the lease served, in the year paid or incurred. It belongs on the failed practice’s final schedule, not spread against unrelated locum income by preference, though on the same Schedule C the netting may work out similarly. Documentation of the business purpose and the termination terms is what defends it.
Can I claim a home office instead as a locum?
Yes, if a space in your home is used regularly and exclusively for the administrative side of your locum business, scheduling, credentialing, billing, records, and you have no other fixed location where you do that work. Clinical work happens at the hospital, but the admin core of a 1099 practice legitimately lives somewhere, and for most locums that somewhere is a home office. It is modest money, but it is clean, and it strengthens mileage positions.
What if I plan to restart the practice later?
Costs of keeping a dormant option alive sit in unfriendly territory: they are not expenses of an active business, and they are not startup costs of one that has launched. If restart is realistic and near-term, document the continuity case. If it is aspirational, ending the lease usually beats funding a deduction argument you would probably lose.
Could I sublease the office and at least net the rent against the income?
Yes, and it converts the analysis cleanly: subleasing turns the space into a rental activity where the rent you receive is income and the rent you pay is the offsetting expense, typically netting to a small deductible loss on the arrangement. A subleased office is a genuinely better tax posture than an empty one, on top of the obvious cash improvement.
What if I actually use the leased office a couple of days a week for locum admin?
Then a defensible allocation exists, but be honest about scale: two days of scheduling and billing work supports deducting a proportionate slice of a modest office, not the full rent on a clinical suite built for a practice. The allocation should reflect what the locum business would rationally rent for that function, which is roughly what your home office already provides free.
Related Locum Tenens Tax Questions
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This page is educational, not individualized tax advice. Locum tenens tax outcomes depend on your contracts, your states, and your numbers. Savings vary by client and results are not typical of every situation. Consult a qualified tax professional before acting on anything here.