October 30, 2018

Personal Investor: Tax perks for home offices

You might call your home your workplace if you’re one of the nearly 3 million self-employed Canadians or those working for larger companies from home. Like any business-related expense, your home office will work in the same way on your annual tax returns with these expenses being deductible. Expenses that are exclusively used for business-purposes are fully deductible. Only a portion of shared expenses, like utilities, repairs and insurance, can be claimed.

Key Takeaways:

  • The portion you can claim on shared expenses is based on what portion of your home is used for your business in terms of its square feet relative to your home’s total square footage.
  • If self-employed, you can add mortgage interest and property taxes to your deductions, which employees cannot claim.
  • One note of caution: If you deduct expenses related to permanent changes, such as renovations or an addition, you could lose the principal residence status on your part of your home and lose a portion of your principal residence capital gains exemption.

“Many deductions are a portion of expenses homeowners typically incur anyway, but claiming the right portion is critical if you don’t want to run afoul of the Canada Revenue Agency.”

Read more: https://www.bnn.ca/personal-investor-tax-perks-for-home-offices-1.1050957

Nearly three million Canadians are self-employed. Others work for larger companies from home. In many cases, their homes are their workplaces.

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