One of the most common questions we receive from the owners of professional corporations is with respect to home-office expenses. Did you know that in order to be eligible to deduct these expenses there are certain requirements that must be met? For example:
- You do not have access to an office at your place of business (only in very specific circumstances is this allowed)
- You have a dedicated office within the house that is used to conduct your business
Presuming you meet the requirements discussed above, you will be able to deduct the part of your home costs that relate to your work space, on a proportionate square footage basis. These costs include:
- Utilities
- Property taxes
- Insurance
- Maintenance
- Internet and phone services
- Mortgage interest
You should avoid deducting depreciation as it may have an affect on the ability to claim the principle residence exemption on your home when it is sold.
Additionally, with the effect of Covid-19 lockdowns requiring employees to work from home, it is likely that those who were not previously eligible to claim this deduction will be for 2020. However, what the 2020 deduction will look like has yet to be determined. There has been reference to a standardized $400 amount for all employees working from home as well as a shorted T2200 form for those employees, but neither of these has come into effect at the time of writing this blog. In addition, both of these metrics are specific to employees, not individuals operating a professional corporation. We will be providing further guidance on these matters once the government releases more information.
Give us a call or come in and see us and we can discuss whether or not and how this deduction can be applied in your situation.
