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06 / Business-use-of-home

Business use of home expenses in Canada

If you are self-employed, CRA has a separate business-use-of-home claim. Its tests, calculation, form, expense limits, and treatment of capital cost allowance (CCA) differ from the employee home-office deduction.

First, meet one of the work-space tests

CRA says a self-employed person may claim expenses for a workspace in the home if either:

  • the workspace is the principal place of business; or
  • the space is used only to earn business income and is used regularly and on an ongoing basis to meet clients, customers, or patients.

These are alternatives. Meeting one is not enough by itself to make every household cost deductible; calculate only the business-use share of eligible costs.

Work out a reasonable business share

CRA’s guide gives workspace area divided by total home area as one reasonable basis. If a room is also used for household life, adjust for how many hours per day it is used for the business, divided by 24 hours. The time adjustment is daily; Avoid using the employee common-room formula of hours out of 168 per week for this self-employed calculation.

Depending on the arrangement, CRA’s guide lists a share of maintenance costs such as heating, home insurance, electricity, and cleaning materials; property taxes; mortgage interest; and CCA. If you rent your home, the workspace share of rent and related expenses may be deductible.

Claim the insurance costs for the business workspace on Form T2125, line 9945. Do not claim an expense on line 9945 if it has already been claimed elsewhere on the same T2125.

Where the claim goes

Use Form T2125, Part 7, for business-use-of-home expenses and enter the amount on line 9945. This is the self-employed business route; Avoid using Form T2200 or the employee Form T777 for this claim.

T2200 and working from home in Canada Home office deduction in Canada

Income limit, carry-forward, and CCA

The business-use-of-home deduction cannot exceed your net business income before these expenses. It cannot create or increase a business loss. Expenses disallowed only because of that limit may be used in a later fiscal period if you continue to meet one of the qualifying work-space tests.

Claiming CCA on the business-use part of your home can bring capital-gain and recapture rules into play when you sell. The cited CRA source warns about those effects; this page does not make a claim about the principal-residence exemption.

Keep the employee and business methods separate. Employees use the federal employment-expense rules. Self-employed people use the T2125 business-use-of-home rules described here.

Sources (checked 2026-10-28)

This summary uses the CRA web page and the 2025 fiscal-period Guide T4002, retrieved 2026-10-28. The CRA Form T2125 PDF and its Part 7 chart were not opened in the source review, so this page does not provide box-by-box form instructions or a worked example. Check CRA’s current guide and form for the fiscal period you are filing.

The owner’s planned home-office measurements and bills have not been supplied. No worked claim, first-hand observation, or result is presented.

Sources (checked 2026-10-28)

This is general information from the cited sources, not an individual tax calculation. Verify current guidance with CRA and, in Quebec, Revenu Québec.