If you are self-employed, a commissioned salesperson or an employee, you may be able to deduct certain expenses for your home office.
The benefits are greatest for the self-employed individual and lessen somewhat for the latter two. The employee is allowed to claim the least.
The minimal requirements for being able to deduct such expenses are:
- The home office must be your principal place of work (more than 50% of work time spent there); or
- It must be used on a regular and continuous basis for meeting customers and clients.
- If you are an employee or commissioned salesperson, you have the additional need to prove the employer requires you to maintain a home office and has signed the appropriate forms.
Office supplies (e.g., paper, toner cartridges, postage, etc.) and phone lines dedicated to the office are deductible in all cases.
Other overheads and expenses such as rent, maintenance and utilities are calculated on the percentage of space occupied by the office in relation to the rest of the house.
Commissioned salespersons can also claim a portion of their property taxes and home insurance.
Self-employed individuals may also claim a portion of their mortgage interest and capital cost allowance (depreciation) on the home. The latter item is tricky, however, and it may leave you with a tax liability on any profit you might make when you sell your home.