The work space in the home must be the place where the employee principally performs the duties of the office/employment, or used exclusively for earning the office/employment income and used regularly and continuously for meeting customers (includes clients and patients) and others in the ordinary course of performing the office/employment duties.

HOME OFFICE EXPENSES

1 Home office expenses cannot increase or create a loss from employment in the current year, but unused amounts may carry forward.

2 Home office expenses are included in sales expenses that are limited to commission income.

Generally, claiming an office in the home does not impact on the status of the home as a principal residence for capital gains purposes. However, employees should be careful to adhere to the CRA’s administrative practice set out in Interpretation Bulletin IT-120R6, Principal Residence. Where an employee established a home office in his/her principal residence, it is the CRA’s practice not to apply the deemed disposition rule, but rather, to consider that the entire property retains its status as a principal residence when the following conditions apply:

• The income-producing activity is ancillary to the main uses of the property as a residence;

• No structural changes are made to the property; and

• No CCA is claimed on the property.