Home Office Deductions

Home Office Deductions for Mental Health Professionals

The shift to virtual therapy has made home office deductions more valuable than ever. Here's how to claim them correctly and maximize your savings.

Two Methods to Choose From

The CRA allows two methods for calculating home office expenses. You can choose whichever gives you the larger deduction.

Simplified Method

$2 per sq ft

Maximum $400/year

  • Quick and easy calculation
  • No receipts required
  • Limited to 200 sq ft maximum

Detailed Method

Actual %

Based on space used

  • Usually higher deduction
  • No square footage limit
  • Requires detailed records

What You Can Deduct (Detailed Method)

✅ Eligible Expenses

  • Rent or Mortgage Interest
    Business portion only
  • Utilities
    Heat, electricity, water
  • Property Taxes
    Business portion
  • Home Insurance
    Business portion
  • Maintenance & Repairs
    General home maintenance

❌ Not Eligible

  • Mortgage Principal
    Only interest is deductible
  • Capital Improvements
    Renovations, additions
  • Personal Living Expenses
    Food, personal items

Important: Principal Residence Considerations

If you claim CCA (depreciation) on your home office, you may have to pay capital gains tax when you sell your home. Most therapists choose NOT to claim CCA to preserve their principal residence exemption.

Consult with a tax professional if you're considering claiming CCA on your home.

Step-by-Step Calculation Example

Sarah's Home Office Deduction

Home Details:
  • • Total home: 2,000 sq ft
  • • Office space: 200 sq ft
  • • Business use: 10% (200 ÷ 2,000)
Annual Home Expenses:
  • • Mortgage interest: $8,000
  • • Property taxes: $4,000
  • • Utilities: $2,400
  • • Insurance: $1,200
  • • Total: $15,600
Home Office Deduction:
$15,600 × 10% = $1,560
Compare to simplified method: 200 sq ft × $2 = $400