# home office expenses if both husband and wife work from home



## modul (Mar 3, 2016)

When both husband and wife work at home, self employed, but at completely different unrelated businesses, how would it be best to calculate % of home office expenses? I understand there is an accepted maximum deduction for home office space for a single business in splitting rental costs and utilities, but when both are in different businesses, how would this work for % if we both have separate home office space set up in the same apartment? ...therefore a larger percentage of our apartment is dedicated to office (in our case the entire living area in a 1 bedroom apartment is our offices)... so is it safe to say that the accepted maximum would be each the same?


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## kcowan (Jul 1, 2010)

You must allocate the apartment as percentages to each business and for living. The living percentage must be the majority. Divide all other expenses according to those percentages. The amounts are based on actual usage estimates not some arbitrary maximum.


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## twa2w (Mar 5, 2016)

Just to clarify, if you have an 800 square foot apartment with 3 bedrooms and you use one bedroom as an office and it is 100 square feet, you can deduct 100/800 of the costs of the apartment. If your spouses uses another bedroom that is 120 square feet they could use 120/800 of the cost of the apartment.
If the two of you shared a bedroom as an office - say 100 square feet, you would have to split the 100/800 share of the apartment expenses between the two businesses.
AFAIK to deduct home office space, the space must not be multifunctional. It must be set up and used only as an office/workspace. If you work out of your home and have a desk in the corner of your bedroom or living room, you cannot deduct a portion of your home expenses agsinst the business.


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## Eclectic12 (Oct 20, 2010)

Here is the CRA info http://www.cra-arc.gc.ca/tx/ndvdls/...ng/ddctns/lns206-236/229/slry/wrkspc-eng.html.

As for "to deduct home office space, the space must not be multi functional .. " that is news to me. Of course this was a while ago and was a small percentage of the overall house/expenses and a good chunk of the room was clearly an office.

CRA has cracked down as many were claiming the home office expense so to be audit proof, if there is a way to make sure the office space has little other things ... the easier it will be should an audit occur.

http://www.cbc.ca/news/business/tax...claims-coming-under-closer-scrutiny-1.1413324


Being self-employed, particularly if you see clients there should help as it likely takes care of the "50%" requirement.


Cheers


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## modul (Mar 3, 2016)

what if there are no clients at all that come, but just that a lot of business is done on computer, and the living room is basically 2 large desks with 2 computers on them, and lots of shelves, and no television or couch or other chairs other than the 2 desk chairs.... would the entire living room then qualify as work space, and we should take the square footage of the living room and divide it by 2 and each declare that share of total percentage (which would total nearly half of the 1 bedroom apartment size for both of us)

my wife's business is completely done on the computer as it is an IT business, my business income is primarily earned out in the field, but I do a lot research and communication through the computer, so it is integral to what I need to achieve, but the computer is not the business itself... logically it deserves to be considered as an expense, as I need to do this research and communication to run my business properly


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## kcowan (Jul 1, 2010)

ISTR that the CRA will only consider home expense if the office can be locked off from the rest of the home. We all know that that is unrealistic.

You can claim number of rooms or share of square feet, which ever is better.


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## twa2w (Mar 5, 2016)

The link quoted is incorrect if I understand the OP correctly.
The link refers to employees who work from home and are not reimbursed for home office. 
If I understand correctly, the OP and spouse are self employed. While the rules are similiar, they are not the same.
Here is the info on self employed. - Refer to the bulletin mentioned at the bottom. I was incorrrect on the multi use as CRA has amended this due to a challenge from a taxpayor and subsequent tax ruling.
From CRA form T2125
Line 9945 - Business-use-of-home expenses
You can deduct expenses for the business use of a work space in your home, as long as you meet one of the following conditions:

it is your principal place of business; or
you use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients.
You can deduct part of your maintenance costs such as heat, home insurance, electricity, and cleaning materials. You can also deduct part of your property taxes, mortgage interest, and CCA. To calculate the part you can deduct, use a reasonable basis such as the area of the work space divided by the total area of your home.

If you use part of your home for both your business and personal living, calculate how many hours in the day you use the rooms for your business, and then divide that amount by 24 hours. Multiply the result by the business part of your total home expenses. This will give you the household cost you can deduct. If you run the business for only part of the week or year, reduce your claim accordingly. For more information, see Interpretation Bulletin IT-514, Work Space in Home Expenses.


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## modul (Mar 3, 2016)

twa2w said:


> ...
> 
> it is your principal place of business; or
> you use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients.
> ....


how is "principal place of business" defined? in my case, I have my computer and desk set up as my office at home, but my business takes place all over the place (just for sake of example, picture a self employed sales job where you have to go and meet all of your clients at their businesses only, and the business you do at home is in communication over the computer and research on the internet in finding potential clients and keeping up with changes in technology and product in the business you are selling products of, etc.)

so no clients come to my home, and my business is anywhere I go to meet clients, but my "brains centre" of my business is me in front of my computer, researching and communicating from home, in reality this is my office and deserves to be treated just the same as if I wasted the money and time to rent an office space somewhere and sit there with my computer and cell phone doing the same exact thing I do in my home for my business


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## twa2w (Mar 5, 2016)

Read the interpretation bulletin reference in my last reply. All will become clear. 
IT 514.


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## modul (Mar 3, 2016)

twa2w said:


> Read the interpretation bulletin reference in my last reply. All will become clear.
> IT 514.


I looked for this bulletin, it is an archived document on cra site http://www.cra-arc.gc.ca/E/pub/tp/it514/README.html

does this mean there is new information added somewhere or is the information of an Archived bulletin still just as valid?

thanks for the info, it is appreciated


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## twa2w (Mar 5, 2016)

The bulletin is still in effect AFAIK. There is no replacement.
From the CRA site..."On August 1, 2013 a standardized Treasury Board of Canada Secretariat “Archived Content” notice was added to all interpretation bulletins (ITs) on the CRA website. The notice has no effect on the status or reliability of the ITs. They are current up to the effective date stated in each publication."
Looks like you are golden
Cheers
J


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