If you use a portion of your home for business purposes, you may be eligible to claim business-use-of-home expenses on your tax return. The Canada Revenue Agency (CRA) provides detailed guidance on how to calculate and report these expenses using Form T2125: Statement of Business or Professional Activities. For detailed instructions on claiming business-use-of-home expenses, visit the CRA’s Guide and ensure your tax filing is accurate and compliant.
What Can You Claim?
You can deduct a portion of your home expenses that directly relate to your business activities, including:
- Utilities (e.g., heat, electricity, water)
- Maintenance and repairs
- Rent or property taxes
- Home insurance
- Mortgage interest (for homeowners)
- Internet and phone costs
Eligibility Criteria
To qualify, your home must be your principal place of business, or you must regularly use a specific area of your home exclusively for meeting clients, customers, or patients.
How to Calculate Expenses
- Determine the percentage of your home used for business by comparing the area used for work to the total area of your home.
- Apply this percentage to your eligible expenses to calculate the deductible amount.
Important Notes
- You cannot deduct expenses that are purely personal in nature.
- The deduction is limited to the income earned from your business. Excess expenses can be carried forward to future years.
- Always check the Canada Revenue Agency (CRA) for updated regulations to ensure your claims comply with the latest tax rules.
NOTE: To ensure compliance with tax regulations and maximize your deductions, it’s recommended to consult with a qualified accountant or tax professional. They can provide tailored guidance specific to your business and financial situation.