What percentage of your home office is tax deductible?

In 2020, the COVID-19 pandemic incited a mass exodus from the office and turned 40% of working Canadians into remote employees. If you were one of them, you probably converted your spare room into an office. Or, if you don’t have a spare room, your dining room table, kitchen table, couch or bedroom has now become the office. 

Naturally, we started outfitting these spaces: buying computer monitors, that ergonomic chair, and perhaps a ring light so we didn’t look completely horrible on video calls. All of that has surely left us with a couple of questions, namely: How much of this can I claim on my taxes?

What percentage of your home is tax deductible if you work remotely?

If you’re self-employed and the size of your office space didn’t change in 2020, you can continue claiming the same percentage of space in your taxes as you did for the 2019 tax year, along with any related work expenses, such as internet access, any new technology you’ve purchased for work, and any work-related materials like subscriptions or notebooks.

If you’re newly self-employed, the easiest way to calculate the size of your work space is to take its square footage and divide by the size of your home, and then multiply that by 100. This will give you the percentage of your home that is being used as an office. So the calculation would look like: 

(150 sf ÷ 700 sf) x 100 = 21% of your home is your office. 

If you’re a salaried employee working from home, let’s look at what you need to do. 

The Canada Revenue Agency (CRA) says you can claim a deduction for your home office expenses if you meet the following criteria: 

• You worked from home in 2020 due to the pandemic OR your employer required you to work from home. 
• You worked for more than 50% of the time from home for a period of “at least four consecutive weeks in 2020.” 
• You spent money on work-related products, such as a computer monitor.
• Your employer has filled and signed either the T2200S or T2200 form. 

Simplified process for filing home office expenses

Prior to this tax year, it was up to remote workers to calculate the percentage of their home that they used as a home office. Now the CRA says that if you meet its criteria, you can claim up to $400 per individual in the household. This temporary, simplified method means you don’t have to keep supporting documents, get a completed and signed T2200 form from your employer, or try to remember the exact square footage of your home. 

If you want to go the detailed route (and yes, the CRA does call it the “Detailed Route”), you’ll be able to claim the actual amounts you spent but you’ll need to keep your documentation, have a completed and signed Form T2200S / Form T2200 from your employer, and figure out the percentage of your home that has now become your office. If you’re not sure what that number is the CRA defines the size of your home as “all finished spaces,” including kitchens, bathrooms and hallways. It then provides examples of how to calculate your office space. And yes, there are diagrams.

Just keep in mind that the CRA says that the size of your workspace must be “reasonable,” so don’t go claiming 50% of your entire space as your office. To determine the size of your workspace, the CRA even provides tips and a calculator. 

What else can I claim on my taxes when working from home?

In addition to your workspace, you can also claim a portion of:

• Heat
• Hydro
• Water
• Internet bill (excluding connection fees)
• Rent
• Utilities related to your condo fees

If you’re an employee who works on commission, you are also eligible to claim all of the above, but you may have to cover certain expenses that salaried employees don’t. For that reason, commissioned employees can also claim part of their home insurance premiums, property taxes, and tools that are reasonable and related to your commission income, like cell phones, computers, tablets, and fax machines.

You can’t claim everything, though. The CRA will not let you claim mortgage interest, furniture or capital expenses, such as changing a furnace. You can find the full list of what can be claimed here. 

The 2020 tax year is going to be a very interesting one. If you need help with deductions, reach out to your accountant or call the CRA. They’re probably expecting our calls.