Home office expenses must meet one of two tests to be deductible:

1. The home office must be used exclusively for business. In particular, it should be used on a regular and continuous basis for business meetings.

2. The home office must be your principal place of business (note that with this test the space can have other uses).

Home office expenses can include rent or mortgage interest, insurance, property taxes, heat, light, telephone and office supplies. Generally, capital cost allowance on the house is not claimed as a home office expense as this can affect your principal residence exemption on the sale of the house.

Home office expenses are usually calculated based on the ratio of the space used for the home office to the total area of the house. A further limitation is that home office expenses cannot exceed the business income.

The above provides general information only. It should not be regarded or relied upon as accounting or taxation advice or opinions. Logan Katz LLP Chartered Accountants would be pleased to provide more information or specific advice on matters of interest to you.
 

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