How do I claim home office expenses in Canada?
Self-employed Canadians can deduct home office expenses on Form T2125 (Part 6) if they meet either of these conditions: 1. The home office is your **principal place of business** (you work there the majority of the time), OR 2. You use the home office space **exclusively** and **regularly** to meet clients or customers **What you can deduct (proportional to the workspace):** - Heat, electricity, water - Home insurance (the business-use portion) - Mortgage interest (not principal) or rent - Property taxes - Maintenance and minor repairs **Calculating the workspace percentage:** Divide the square footage of your workspace by the total square footage of your home. For example, a 150 sq ft office in a 1,200 sq ft home = 12.5% business use. **Important restriction:** Home office expenses cannot create or increase a business loss — they can only reduce income to zero. Unused amounts carry forward to the following year. Note: Employees who worked from home in 2020–2022 had access to simplified methods, but these no longer apply from 2023 onward.
- Two qualifying conditions: principal place of business, or exclusive client-meeting space
- Claim proportional share of heat, electricity, insurance, rent, and property taxes
- Workspace % = office sq ft ÷ total home sq ft
- Cannot create a business loss — carry unused amounts forward
- Mortgage interest (not principal) qualifies; CCA on home portion is usually not recommended