Home Office Expense Deduction
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This page was last updated on April 14, 2020.
More and more workplaces are transitioning to work-from-home setups in an effort to slow the transmission of COVID-19. If you are working from home as a result of COVID-19 and wondering if you can deduct your home office expenses for 2020, here is some information to help.
Can I deduct my home office expenses for 2020 now that I am working from home due to COVID-19?
The answer is maybe, providing you meet one of the following conditions:
The workspace is where you mainly (more than 50% of the time) do your work; OR
You use the workspace only to earn your employment income AND you also use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties. Arguably, Zoom meetings will count as meeting client, customers, and others.
Your Employer will need to Complete Form T2200 verifying that you were required to have a home office as a part of the terms of your employment. A copy of this form can be accessed here: Form T2200, Declaration of Conditions of Employment
The work space MUST be a separate place in your home that is used exclusively for work. It cannot be the dining room because you set your computer up there temporarily, or any such other space. The space must be used only for work in order for you to be eligible to claim home office expense.
What Can I Deduct?
You can deduct a portion of the expenses related to your home, excluding mortgage interest, property taxes, home insurance, and capital cost allowance. (Note that commissioned salespersons may be able to claim a portion of property taxes and insurance.) All other costs such as heat, electricity, water, security, and maintenance are eligible, plus any other costs specifically related to your home office. If you rent your home/apartment, then a portion of your monthly rent may be a deductible expense.
The portion of expenses that are deductible is to be calculated on a “reasonable basis”. This generally means taking the square footage of your office divided by the total square footage of your home = your deductible portion.
Amounts can only be deducted against employment income, so if they exceed your net employment income, they will not be deductible in the current year but will instead be carried forward to the next year to deduct against income from the same employer.
How Do I Deduct the Expenses on my Return?
In order to claim home office expenses, you will need to complete Form T777 with your 2020 personal tax return.
What Should I Collect Now?
You should ensure you keep an electronic or paper file of all of the expenses for your home/apartment that can be claimed: statements for monthly charges for heat, electricity, water, security, and all maintenance receipts. Note that this includes cleaning fees.