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Canada Home Office Expenses Guide

the home office expenses in Canada. The home office deduction is available to both the employees and the self-employed individuals, but the rules are different. The employee home office deduction requires the Form T777 (the "Statement of Employment Expenses") and the Form T2200 (the "Declaration of Conditions of Employment") or the Form T2200S (the simplified version for the work-from-home). The T2200 must be signed by the employer and confirms that the employee is required to maintain the home office. The simplified method for the employees: $5 per day for the home office use (up to a maximum of $500 per year). The detailed method for the employees: the proportional share (the "business use of the home" — the percentage of the home used for the work) of the utilities, the rent, the internet, and the maintenance. The employees CANNOT deduct the mortgage interest (the "employee home office" — the mortgage interest is NOT deductible for the employees). The self-employed home office deduction — the self-employed individuals can deduct the proportional share of the mortgage interest (or the rent), the property taxes, the insurance, the utilities, the maintenance, and the internet. The self-employed workspace must be the "principal place of business" or the "used exclusively for the business" and "regularly and continuously used" to meet the clients. The temporary work-from-home rules (the COVID-19 and the post-COVID rules) — the flat-rate method at $2 per day (for the 2020-2022 years) and the simplified method at $5 per day (for the 2023+ years).

Employee Home Office Deduction

• T2200/T2200S requirement: The employee must have the T2200 (the "employment conditions" form) or the T2200S (the "simplified" form) signed by the employer. The T2200 confirms that the employer requires the employee to maintain the home office and the employer does not provide the workspace at the employer's location.
• Simplified method: $5 per day for the home office use (the "flat-rate method" for the employees). The maximum deduction is $500 per year (100 days at $5 per day). The taxpayer must work from the home on the day (the "days worked from the home" — the day the taxpayer performs the work at the home office).
• Detailed method: The employee can deduct the proportional share of the home office expenses (the "workspace-in-the-home expenses"). The eligible expenses include the electricity, the heat, the water, the internet (the "utility costs"), the rent (for the rented home), the maintenance (the cleaning, the repairs). The mortgage interest is NOT deductible by the employee.
• Office space allocation: The expenses are allocated on the "square footage" basis (the "home office percentage" — the office area divided by the total home area multiplied by 100). The CRA accepts the "room count" method (the number of rooms used for the office divided by the total number of the rooms).
• Form T777: The "Statement of Employment Expenses" — the form is filed with the T1 General return. The T777 reports the total home office expenses (the simplified or the detailed method) and the other employment expenses (the vehicle, the tools, the supplies).

Self-Employed Home Office Deduction

• Principal place of business: The home office must be the "principal place of business" (the "primary location" where the business is conducted). The self-employed individual who uses the home office "exclusively" (100% business use) and "regularly and continuously" can deduct the expenses.
• Exclusive use: The workspace must be "used exclusively for the business" — the CRA requires the dedicated room or the designated area that is not used for the personal purposes. The "exclusive use" requirement is enforced by the CRA (the home office that is also used as the guest bedroom does NOT qualify).
• Expenses: The self-employed individual can deduct the proportional share of the mortgage interest (or the rent), the property taxes, the home insurance, the utilities (the electricity, the gas, the water, the internet), the maintenance (the repairs, the cleaning), and the "home office depreciation" (the CCA on the home office portion — the "capital cost allowance" at the 4% declining balance).

For the self-employment income and the business deductions, see our Self-Employment Guide →. For the vehicle expenses and the mileage tracking, see our Vehicle Expenses Guide →.