If you live in a condominium and have a home office, you may be eligible for a tax exemption by deducting a portion of your expenses if you meet certain conditions.
The Canadian Revenue Agency (CRA) states that to be eligible for tax deductions, the home office must be the space where you perform at least 50% of your work. Someone who works as a landscaper, for example, probably does not qualify because they do not do enough of their work in the space set aside for them in the home.
For your home office to qualify, it must be an area that you use exclusively and continuously to generate income and that it is a meeting point with clients or other people related to your employment.
You can deduct a portion of your household expenses, such as heating and utilities, property taxes, home insurance, electricity and maintenance fees. However, you can only deduct work space expenses from income related to expenses and not other income. CRA suggests that when deciding how much of your home’s expense you can deduct, use a reasonable basis, such as the workspace area divided by the total area finished, including hallways, restrooms and kitchen.
As for maintenance costs, you can not deduct the cost of a renovation to an area unrelated to your home office, such as a new carpet for the room, for example. Although, if your expenses relate only to the work area, you may be able to deduct the total cost. If you do not work on your own, your employer must complete and sign the T2200 form, so that you can claim office expenses.
People who are self-employed must keep all their receipts in case of an audit by CRA. The amount you can deduct for work space expenses in the home is limited to the amount of income, for employment reasons, remaining after all other expenses have been deducted, again, for employment reasons. This means that you can not use the workspace expenses to create or increase a job loss. However, you can transfer the expenses to the following year if you can not deduct them all during the current year, but you still can not use them to create or increase a loss.
If you have any questions about how to declare your taxes as a self-employed worker, contact me and I will be glad to advise you in the process.