Business use of home expenses Flashcards
Business use of home expenses
A taxpayer can deduct expenses for the business use of a workspace in the home, as long as they meet one of the following conditions:
* The home is the principal place of business.
* They use the space only to earn business income, and the taxpayer uses it on a regular and ongoing basis to meet clients, customers, or patients.
Eligible costs include: heat, home insurance, electricity, property taxes, repairs and maintenance, mortgage interest or rent (if tenant).
* Expenses are pro-rated using a reasonable basis such as the area of the work space divided by the total area of the home.
* Home office expenses are also pro-rated for a short business year.
* Losses cannot be created by home office expenses. Unused expenses are carried forward for use in a later year.
* Do not claim CCA on a principal residence, as it may negatively impact the ability to use the principle residence exemption.
Reference: ITA 18(12), Publication T4044, Income Tax Folio S4-F2-C2, Business Use of Home Expenses
