If you work from home, you can claim a portion of your household expenses as business deductions. But the rules depend on whether you’re self-employed, a salaried employee, or a commissioned salesperson, and getting the calculation wrong can either leave money on the table or trigger a CRA reassessment.
We already have a detailed guide on the working from home tax deductions for employees. This post focuses specifically on how to calculate the home office percentage and which expenses you can actually claim.
Last updated: April 2026
Who Can Claim Home Office Expenses?
You qualify if one of these applies:
- Your home is where you mainly (more than 50% of the time) perform your work duties
- You use a dedicated space in your home exclusively for work, and you use it regularly and continuously for meeting clients, customers, or patients
“Mainly” means more than half. If you split time between a corporate office and home, you need to be working from home the majority of your working hours for the first test. The second test is stricter, requiring exclusive use, but it doesn’t require the “more than 50%” threshold.
How to Calculate Your Home Office Percentage
This is where most people either overthink it or get it wrong.
The Square Footage Method
The most common approach: divide your office space by your total livable area.
Example:
- Home office: 150 sq ft
- Total home: 1,500 sq ft
- Percentage: 150 / 1,500 = 10%
What counts as “total area”? Use the total finished, livable square footage. You can typically exclude common areas like hallways, bathrooms, and the kitchen from the total, which increases your percentage. Some accountants include them, some don’t. Be consistent and be reasonable.
The Room Count Method
If rooms are roughly the same size, you can divide the number of rooms used for business by the total number of rooms. CRA accepts this method.
Example: You use 1 room out of 8 = 12.5%
Time-Based Adjustment
If you don’t use the space exclusively for work (maybe it’s also a guest room), you need to further prorate by the time it’s used for business.
Example: 10% of home, used for business 70% of the time = 10% x 70% = 7%
Which Expenses Can You Claim?
| Expense | Self-Employed | Salaried Employee | Commissioned Employee |
| Rent | Yes | Yes | Yes |
| Electricity | Yes | Yes | Yes |
| Heat (gas, oil) | Yes | Yes | Yes |
| Water | Yes | Yes | Yes |
| Internet (business %) | Yes | Yes | Yes |
| Home insurance | Yes | No | Yes |
| Property taxes | Yes | No | Yes |
| Mortgage interest | Yes | No | No |
| Maintenance & repairs | Yes | Yes | Yes |
| CCA (depreciation) | Yes (caution) | No | No |
A Real Calculation Example
Let’s say you’re a self-employed Amazon seller working from a 200 sq ft office in a 2,000 sq ft home. That’s 10%.
| Expense | Annual Total | 10% Business Portion |
| Rent or mortgage interest | $18,000 | $1,800 |
| Property taxes | $4,000 | $400 |
| Electricity | $1,800 | $180 |
| Heat | $1,500 | $150 |
| Water | $600 | $60 |
| Home insurance | $1,400 | $140 |
| Internet (50% business use) | $960 | $480 |
| Maintenance/repairs | $800 | $80 |
| Total home office deduction | $3,290 |
At a 30% marginal tax rate, that’s about $987 in tax savings. At 48%, it’s $1,579. Not life-changing, but it adds up year after year.
Important Rules to Remember
You Can’t Create a Business Loss
Home office expenses for employees can’t exceed employment income. For self-employed individuals, home office expenses can’t create or increase a business loss. But you CAN carry forward unused amounts to a future year.
Be Careful With CCA (Depreciation)
If you’re self-employed and own your home, you technically can claim Capital Cost Allowance (depreciation) on the business-use portion of your home. But I almost always advise against it. Why? When you sell your home, the CCA-claimed portion may not qualify for the principal residence exemption. You could end up paying capital gains tax on the sale of your home. The annual CCA savings rarely justify that risk.
GST/HST Input Tax Credits
If you’re registered for GST/HST, you can claim ITCs on the business portion of home expenses where GST/HST was charged. This includes things like internet, repairs, and some utilities. Mortgage interest, property taxes, and insurance don’t have GST/HST, so no ITCs there.
Keep Your Receipts
CRA can ask for documentation for any home office claim. Keep utility bills, property tax statements, insurance documents, and repair receipts for at least 6 years.
Employees Need a T2200
If you’re an employee claiming home office expenses, your employer must complete and sign Form T2200 (Declaration of Conditions of Employment). Without it, CRA can deny your entire claim. Ask your employer for this early since some are slow to fill it out.
Frequently Asked Questions
Can I claim home office expenses if I rent?
Yes. Renters can claim the business-use portion of their rent, utilities, and internet. This applies to self-employed individuals, salaried employees, and commissioned salespeople. Renters often get a larger deduction than homeowners because rent is typically higher than mortgage interest alone.
How much of my home can I claim for business use?
There’s no fixed limit, but it needs to be reasonable. Claiming 50% of a 3,000 sq ft house as office space will raise flags. Most home office claims are in the 5-20% range. Use the actual square footage of your dedicated workspace divided by total livable area.
Can I claim home expenses and also claim vehicle expenses?
Yes. They’re separate deductions. If you work from home and also drive for business, you can claim both the home office percentage of household costs AND vehicle expenses (either actual costs or per-km reimbursement). Keep a logbook for the vehicle.
Not Sure What You Can Claim?
The home office deduction is legitimate and valuable, but the rules differ based on your employment type. If you’re not sure what applies to your situation, contact us and we’ll make sure you’re claiming everything you’re entitled to without overstepping.