Quick answer
The $2 per day flat rate method is gone; it only applied to 2020 through 2022. For 2023 and later, employees claim home office costs using the detailed method with a Form T2200 signed by their employer, deducting the workspace percentage of eligible costs. Self-employed people use the business-use-of-home rules, which allow a wider range of costs including mortgage interest.
Are home office expenses tax deductible in Canada?
Yes, but how you claim depends on whether you are an employee or self-employed, and the temporary pandemic shortcut no longer exists. Employees must use the detailed method and hold a Form T2200 signed by their employer confirming they were required to work from home. The deduction is the workspace percentage of eligible costs.
What counts as eligible differs by status. Salaried employees can claim a share of utilities, maintenance, and rent, but not mortgage interest, property tax, home insurance, or capital cost allowance. Commission employees can add property tax and home insurance. Self-employed people, under the business-use-of-home rules, can claim the widest range, including mortgage interest. See the wider Canadian expense rules for context.
How much can you claim?
Your claim is the workspace percentage of eligible costs. The percentage is your work space area divided by the total finished area of the home, adjusted for hours of use if it is a common area.
| Cost | Salaried employee | Self-employed |
|---|---|---|
| Utilities, maintenance | Yes | Yes |
| Rent | Yes | Yes |
| Property tax, home insurance | No (commission: yes) | Yes |
| Mortgage interest | No | Yes |
| Capital cost allowance | No | Yes (optional) |
Worked example. An employee uses a 10 square metre room in a 100 square metre home, a 10% workspace. With $4,000 of utilities and $18,000 of rent for the year, she claims 10%, which is $2,200. She cannot add mortgage interest or property tax. A self-employed person in the same home could also claim 10% of mortgage interest and property tax, but only up to the point of not creating a loss, with the rest carried forward.
Record-keeping requirements
Keep your utility, rent, and maintenance bills, your workspace and total-area measurements, and, for employees, the signed Form T2200. The self-employed keep mortgage, property tax, and insurance statements as well. Records must be kept for six years. GST/HST registrants keep the documentation needed to claim input tax credits on the business portion.
How to claim, step by step
- Employees: get a Form T2200 signed by your employer for the year.
- Measure your work space area and the total finished area of your home.
- Work out your workspace percentage, adjusting for hours if it is a common area.
- Apply that percentage to your eligible costs for your status.
- Self-employed: remember the deduction cannot create a loss, but the excess carries forward.
- Keep all bills, measurements, and the T2200 for six years.
Common mistakes
- Using the $2 per day flat rate, which no longer exists after 2022.
- Claiming home office expenses as an employee without a signed T2200.
- A salaried employee claiming mortgage interest or property tax, which are not allowed.
- Self-employed filers using the deduction to create a business loss instead of carrying it forward.
- Overstating the workspace percentage or forgetting the hours adjustment for a common area.
Software that helps
A home office claim is only as good as the bills and measurements behind the percentage.
- QuickBooks tracks home office costs against the business for self-employed filers.
- ExpenseFlow captures your utility, internet, and maintenance bills, codes each with the correct GST/HST treatment, and syncs them to Xero or QuickBooks, so the records behind a home office claim sit in one place.
- Wealthsimple Tax walks employees through the detailed method at filing time.
FAQ
See the answered questions above for the flat rate, the T2200, the workspace percentage, and what employees and the self-employed can claim.