Who can claim and for which space
The CRA allows the deduction if the workspace is your principal place of business, or if you use it only to earn business income and on a regular, ongoing basis to meet clients, customers or patients. A kitchen table used for invoicing in the evenings is harder to support than a dedicated room. This page covers self-employed people. Employees follow different rules.
Rent counts if you rent your home. The deductible costs include a share of heating, home insurance, electricity, cleaning materials, property taxes and mortgage interest. Capital cost allowance is also possible, but it carries consequences when you later sell.
Allocating the costs
Use a reasonable basis, commonly the area of the workspace divided by the total area of the home. If rooms serve both business and personal life, the CRA describes dividing the hours of business use in a day by 24 and applying that to the business share. If you operate for only part of the week or year, reduce the claim accordingly.
As an illustration, a 15 percent workspace share applied to $12,000 of eligible annual home costs gives a $1,800 claim. A calculation like this should be based on your actual costs, with the working kept.
The limit and the carry-forward
The deduction cannot exceed your net income from the business before it, so it cannot create or increase a loss. Suppose the business earned $1,000 before this expense. You could claim $1,000 of an $1,800 amount, and the remaining $800 could be carried forward to a later period when you still meet the conditions.
The expense is claimed through Form T2125, Part 7, and should not also be claimed elsewhere on the form.
Common mistakes and what to ask
Common mistakes include claiming a space that is also a family room, using a rough percentage without a measurement, and double-counting utilities already deducted elsewhere. Claiming capital cost allowance can bring capital gain and recapture rules into play when you sell, so review it before choosing, and see how it interacts with the principal residence exemption.
Bring measurements, your home’s annual bills and a note describing how you use the space. Ask your accountant whether to claim the maximum each year.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- Business-use-of-home expensesCanada Revenue Agency
- Business expensesCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.