# How to claim home office expenses when you are self-employed in Canada

> A self-employed Canadian can deduct part of their home costs on line 9945 of Form T2125 if the workspace is their principal place of business, or if it is used only for the business and regularly to meet clients. The deductible share is usually the office's floor area as a fraction of the home, applied to rent or mortgage interest, utilities, insurance, property tax and maintenance. The claim cannot create or increase a business loss; the excess carries forward.

Source: https://simpleloonie.ca/guides/home-office-expenses-self-employed
Published: 2026-09-25 · Last reviewed: 2026-09-25

## Key facts

- **T2125 line:** 9945, business-use-of-home expenses
- **Test 1:** Principal place of business
- **Test 2:** Used only for business and regularly to meet clients
- **Usual split:** Office area divided by total finished area
- **Mortgage principal:** Not deductible
- **Loss limit:** Cannot create a loss; excess carries forward

## Who can claim home office expenses on the T2125?

You can claim a share of your home costs if your workspace meets one of two conditions. Either it is your principal place of business, or you use it only to earn business income and on a regular and ongoing basis to meet clients, customers or patients in person.

*The two tests, and what each one allows*
| Test | What it means | Can the room have personal use? |
| --- | --- | --- |
| Principal place of business | Most of your business is run from home — the typical freelancer, consultant or online seller | Yes, but only the business share of its use counts |
| Regularly meeting clients | You have premises elsewhere but see clients at home on a regular, continuous basis | No — the space must be used only for the business |

Meeting a client at home once or twice a month does not satisfy the second test. The CRA's own illustration contrasts a practitioner seeing several patients a day, which qualifies, with one seeing one or two a week, which does not.

> **This guide is about the self-employed.** Employees who work from home claim a different deduction, on Form T777 with a T2200 from the employer. The rules and the forms are not the same as the T2125 claim described here.

## Which home costs can I deduct?

*Home costs and whether the business share is deductible*
| Cost | Renters | Owners |
| --- | --- | --- |
| Rent | Yes | Not applicable |
| Mortgage interest | Not applicable | Yes — interest only, never the principal |
| Heat, electricity and water | Yes | Yes |
| Home insurance | Yes, tenant insurance | Yes |
| Property taxes | Not applicable | Yes |
| Maintenance and minor repairs | Yes, if you pay for them | Yes |
| Internet | Business share, usually on line 9220 instead | Business share, usually on line 9220 instead |
| Capital cost allowance on the house | Not applicable | Possible, but usually a bad idea |

Claiming capital cost allowance on the home itself is allowed, but it can make part of the home ineligible for the principal residence exemption when you sell and can trigger recapture. Most owners do not claim it. Repairs that affect only the office, such as painting that one room, can be deducted in full; repairs to the whole house are shared like any other cost.

## How do I calculate the business share of my home?

1. **Measure the workspace** — Take the floor area of the office and divide it by the total finished area of the home, including hallways, bathrooms and the kitchen.
2. **Adjust for shared use** — If the space is your principal place of business but also used personally — a dining table that is a desk by day — reduce the share by the proportion of time it is used for the business.
3. **Total the eligible costs** — Add up the year's rent or mortgage interest, utilities, insurance, property tax and maintenance from the bills and receipts.
4. **Apply the percentage** — Multiply the total by the business share. A 120 square foot office in a 1,200 square foot home is 10%, so CA$24,000 of eligible costs gives a CA$2,400 claim.
5. **Check it against business income** — The claim cannot create or increase a loss. Anything above your business income for the year carries forward and can be claimed against income from the same business in a later year.

## Which receipts and records do I need for a home office claim?

- Every utility bill, the insurance policy and the property tax statement for the year.
- The lease, or the mortgage statement showing the interest paid for the year.
- Receipts for repairs and maintenance, with a note of whether each affected only the office or the whole home.
- A floor plan or measurements showing how the business share was worked out, and a note of the hours if the space is shared.

These are recurring bills, usually PDFs from a utility or an insurer, and they are the documents most often missing at year end. SimpleLoonie reads PDF bills as easily as photographed receipts, files them in a category of your choosing, and exports the year so the eligible costs can be totalled in one step. Applying the business share and deciding whether a claim qualifies remain decisions for you and your accountant.

## Frequently asked questions

### Can I claim a home office if I also have an office elsewhere?

Only if the home workspace is used exclusively for the business and on a regular, continuous basis to meet clients, customers or patients. If your principal place of business is elsewhere and you only occasionally work or meet people at home, the home office does not qualify.

### Can I deduct my mortgage payments as a home office expense?

Only the interest portion, and only the business share of it. Repayments of mortgage principal are never deductible. Your lender's annual statement shows how much of the year's payments was interest.

### What happens if my home office claim is more than my business income?

The business-use-of-home deduction cannot create or increase a business loss. The part you cannot use this year carries forward indefinitely and can be deducted against income from the same business in a later year, provided the workspace keeps qualifying.

### Should I claim capital cost allowance on my home?

Most people should not. Claiming capital cost allowance on the home can reduce the principal residence exemption on the business part when you sell and can lead to recapture. It is allowed, but talk to an accountant before claiming it.

### Is the home office claim for self-employed people the same as for employees?

No. Self-employed people claim business-use-of-home expenses on line 9945 of Form T2125. Employees working from home claim workspace expenses on Form T777 and need a signed T2200 from their employer, with a different list of eligible costs.

## Sources

- [Canada Revenue Agency — Business-use-of-home expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/business-use-home-expenses.html)
- [Canada Revenue Agency — Income Tax Folio S4-F2-C2, Business Use of Home Expenses](https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-4-businesses/series-4-businesses-folio-2-deducting-business-expenses/income-tax-folio-s4-f2-c2-business-use-home-expenses.html)
- [Canada Revenue Agency — Guide T4002, Chapter 3: Expenses](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-5.html)