Home Office for Business or Employment Use

 

If you are self-employed and using a portion of your home to conduct or run your business, you may be eligible to deduct a portion of your expenses on your tax return.  The CRA has strict requirements in place for allowing deductions related to the use of your home for business purposes.

 

To claim business use of home expenses your home must be:

- the principal place of business;

- "principal place" generally meaning more than 50 percent of the time

- or the workspace is used exclusively for the purpose of earning income; and

- is used on a regular and continuous basis for meeting with clients, patients and/or customers.

 

Conducting business where you live means those expenses are contributing a percentage to your overall home expenses.

 

Calculating the "designated home office space" for working in the office or garage requires measuring the square footage to find what the allowable portion and a portion of the entire home/apartment. This percentage is then used to deduct the correct portion of house expenses.

 

If you own the home you can also deduct portions of:

- mortgage interest

- property taxes

- home insurance

- maintenance and minor repairs (not renovations)

- utilities

- cleaning supplies.

 

Another contention of claiming these deductions is that there must be income. The expenses cannot be used to create a business-loss. Home office expenses greater than current year net income may be carried over to apply to next year's net income.

 

 

The above information is of a general nature only and should not be relied upon for specific situations.  Call Marlies Y Hendricks, CPA at 416-766-3941 or submit email enquiry form below to set up a consultation.