Home Office Restrictions

“Can I write off an office in my home?”

In certain situations it may be possible to write off a work space in your home. This may provide a tax write off for items such as mortgage interest, hydro and other utilities, property taxes, rent, insurance and home maintenance. These expenses would be written off on a proportionate basis, based on the square footage of your home office as a percentage of your total home square footage.

If you are an employee, your only access to this write off as part of your employment is if your employer signs section 9(a) of form T2200 “Declaration of Conditions of Employment”. This form essentially states that your employer requires you to maintain a work space in your home.

If you are a small business owner, you must meet one of the following two tests to allow for a home work space write off:

(a) The work space is the individual’s principal place of business; or

(b) It is used on a regular and continuous basis for meeting clients, customers or patients of the individual in earning income from business.

It is important to note that the space must be used exclusively for business. For example, if your home office is in your bedroom, it would not be eligible for the write off provisions.

There are additional restrictions on the type of home office expenses allowed depending upon whether or not you are a salaried employee, a commission employee or self-employed. For example, if you are an employee you cannot write-off any mortgage interest but as a self-employed individual you can.

To find out if you are eligible to write off a work space in your home, please give us a call.

NOTE: The Shannon & Company 'Tips' are NOT intended to cover all tax issues. You should talk to your Shannon & Company professional before making any decisions regarding the information found here.


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