Working from home? What expenses can you claim?

Home Office

A lot of business owners run their businesses or let employees work out of their homes to save on overhead costs. However, home office expenses needed to be reported correctly as this is a heavily audited area by CRA. Below are rules that need to be followed when claiming this deduction.

Individuals are allowed to claim home office expenses provided either you do your work there more than 50% of the time or you use the workspace only to earn your employment income. You must use the space for client or customer meetings on a regular basis in the course of your employment duties.

As well, the deduction is calculated by taking the square footage of your home office divided by the total square footage of the finished portion of your home. For example, if your home office is 100 square feet and your home’s total square footage is 2000 square feet then you can claim 5% of your eligible home expenses. You cannot claim more than your employment or business income. Any left-over expenses are carried forward to the next tax year.

Self-Employed Commission Employment Income
Heat Yes Yes Yes
Electricity Yes Yes Yes
Water Yes Yes Yes
Maintenance Yes Yes Yes
Rent Yes Yes Yes
Property tax Yes Yes No
Insurance Yes Yes No
Mortgage interest Yes No No

To note, maintenance expenses are only applicable to the workspace itself.

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Shawn Oldridge