A Simple Guide for Sole Props and Corporations

Running a business from home? You’re not alone — and yes, the CRA lets you deduct part of your housing costs if your workspace qualifies. But many business owners miss out on what they could be claiming… or go too far and risk getting flagged.

Let’s break it down. Here’s what actually counts as a home office expense in Canada — and how to calculate it the right way.

🏡 First, Do You Qualify for the Home Office Deduction?

To claim home office expenses, your workspace must meet one of these two CRA rules:

1. It’s your principal place of business, or
2. You use it exclusively to earn business income and meet clients/customers there on a regular basis.

➡️ In plain English: If you work from home full-time, you’re usually good. But if you just answer emails from the couch once in a while, probably not.

📏 The CRA Formula: Square Footage & Percentages

The CRA uses a pro-rated method to figure out how much of your home expenses are deductible.

Let’s say:

• Your home is 1,000 square feet
• Your office takes up 100 square feet

That’s 10% of your home. So, 10% of eligible costs can be written off.

❗If the space is shared (e.g., a kitchen table used for work during the day), you’ll also need to factor in how many hours per day you use it for business. That reduces your percentage further.

💡 If you renovate just your home office (e.g. soundproofing, built-in desk), that portion may be claimed as a capital expense.

💡 Example: Home Office Expense in Action

Imagine you rent a condo and work full-time from a dedicated 120 sq ft office. Your total square footage is 1,200 — so 10%.

Your monthly home costs:

• Rent: $2,000
• Utilities: $200
• Internet: $100

Your write-off:

• 10% of $2,000 = $200
• 10% of $200 = $20
• Internet: Estimate business use at 80% → $80

Monthly deduction: $300
Yearly total: $3,600

📌 Other Tips & Rules to Know

• Corporations vs Sole Props: If you’re incorporated, you technically become a landlord renting space to your own corp. It's a bit more complex (but possible). Best to discuss with your bookkeeper to set it up right.
• Shared spaces: Only count the time the space is used for business. CRA doesn’t let you claim 24/7 for your kitchen table.
• Carryforward: If you can't use the full deduction this year (e.g. you don’t earn enough), you may be able to carry it forward.

✅ TL;DR: Claiming Your Home Office Expenses in Canada

• You can deduct a portion of your home expenses if your workspace qualifies.
• Use square footage and hours per day to calculate your percentage.
• Only business-use portions of rent, utilities, internet, etc. are claimable.
• Sole props and corporations have different rules — setup matters!

Next Up: Part 3 — Meals & Entertainment: What the CRA Actually Allows 🍔
We'll dive into how to handle client lunches, coffee meetings, conferences, and where the 50% rule kicks in.

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