Business Use of Home

By Victoria E. Turnbull

Home Office Tax Deduction

Are you self-employed? Do you have a home office? Are you deducting your business use of home expenses? Did you know that you can?

You can claim your home office tax deduction expenses as long as you meet one of the following requirements: It is your principal place of business and/or you use the office space to earn business income and you use it on a regular basis to meet clients. Do you meet the criteria? If so, you can deduct the following expenses on your personal income tax return:

• Heat
• Electricity costs
• Home insurance
• Mortgage interest
• Capital cost allowance
• Home repairs and maintenance
• Property tax
• Rent

If you are interested in learning more about the Home Office Tax Deduction, contact us now!

The expenses mentioned have to be related to your office space. However, you cannot claim the full amount of these expenses on your tax return. For example: If the square footage of your home is 1000 sq ft. and the square footage of your office space is 200 sq ft. then you would only be able to claim 20% of the home expenses mentioned above on your personal income tax return. You cannot use home office tax deduction to create or increase a loss, therefore, your business use of home expenses cannot exceed your net income.

If you are self-employed, your business use of home expenses are reported on the form T2125 Statement of Business or Professional Activities. If you have employment income, the Canada Revenue Agency requires your employer to sign the form: Declarations of Conditions of Employment in order to claim the business use of home expenses. There are also restrictions on what you can claim. For example: You can claim mortgage interest and capital cost allowance if you are self-employed, but you cannot claim these under business use of home if you have employment income.

To Learn more about the CRA & Business Expenses, including the home office tax deduction, check out their Website.

Disclaimer:
THIS ARTICLE deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other
appropriate professional advice should be sought before acting upon any of the information contained therein.

Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or
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