You are now an entrepreneur, and you have decided you can work from home. Are you aware you can claim for your business part of your home expenses? But there is a trick: you need to spend most of your time working at home! (generally interpreted as more than 50% of the time). The space must also be used on a regular and continuous basis for meeting with your clients. Based on the square footage of your home office, you can then apply the calculated percentage to expenses as: mortgage interest (not principal), property taxes, home insurance, heat, hydro, water, maintenance costs or rent if you don’t own the house. Any expenses incurred solely for the home office can be deducted in full. As a self-employed you are not allowed to increase your loss with the home office expenses, but the good news is you can carry them forward to subsequent years and use them when you generate income. If you are registered for the GST/HST program, you can also claim input tax credits (ITC) for the portion of your home related to your business.
TIP: Avoid claiming depreciation on the portion of your home used for business purposes. It can be negative tax implications if you decide to sale your home. If you claim the depreciation, that portion of your home may be excluded from the principal residence status and any gain can be taxed.
TIP: Avoid claiming depreciation on the portion of your home used for business purposes. It can be negative tax implications if you decide to sale your home. If you claim the depreciation, that portion of your home may be excluded from the principal residence status and any gain can be taxed.
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