Home office expenses for self-employed individuals

If you are self-employed and work from a dedicated space in your home, you can deduct part of your home costs from your business income on your 2026 tax return. This guide covers who qualifies, how the deduction is calculated, and the records to keep.

Who can claim

You can claim business-use-of-home expenses if your workspace meets at least one of these two conditions:

1. 01It is your principal place of business. You do most of your work there, as many consultants and freelancers do.
2. 02You use it only to earn business income, and you meet clients there on a regular and ongoing basis. Occasional meetings in a shared room do not qualify, and phone or video calls do not count as meetings in person.

The space should be a designated area used only for the business, such as a spare bedroom set up as an office. A living room or kitchen table used for work in the evenings does not qualify.

Your business-use percentage

The share of your home costs you can deduct equals the share of your home's area used for the business.

For example, a 120 sq ft office in a 1,200 sq ft home gives 10% business use. The CRA also accepts the number of rooms used for business divided by the total number of rooms, where the rooms are of similar size.

Keep a simple floor plan showing where the office is, with its size and the total size of your home. It's the evidence the CRA asks for if it reviews the claim.

Expenses you can claim

Apply your business-use percentage to the home costs below. Homeowners can include mortgage interest and property taxes; renters claim rent instead.

Costs that relate only to the office, such as painting the office or repairing its window, can be claimed in full rather than by percentage. Your business phone line and business software are claimed separately as regular business expenses, not as home office costs.

Why we don't recommend capital cost allowance

Claiming depreciation on your home can make part of it taxable when you sell, because that part would no longer be covered by the principal residence exemption.

A worked example

A consultant whose office is 10% of the home deducts $1,710 of $17,100 in yearly home costs.

If you bought or moved into your home during 2026, include only the costs from the date you started using it for the business. Your purchase statement of adjustments shows the property taxes and other amounts you paid at closing.

Limits and where it's reported

Your home office claim can reduce your business income to zero, but it cannot create or increase a business loss.

• 01Carry forward: any amount you can't use this year carries forward and can be deducted against your business income in a later year.
• 02Where it goes: the claim is calculated in the business-use-of-home section of Form T2125, Statement of Business or Professional Activities, and entered on line 9945. The T2125 is filed with your personal T1 return.
• 03Self-employed vs employees: self-employed people use actual costs only; there is no flat-rate method. Employees follow different rules and need Form T2200 signed by their employer.

Bought your first home in 2026?

You can claim the $10,000 home buyers' amount on line 31270 of your 2026 return, which reduces your federal tax by $1,400.

• 01Value: the $10,000 is an amount, not a credit. Most federal non-refundable credits are calculated at the lowest federal tax rate, 14% for 2026, so the credit is $10,000 × 14% = $1,400. It reduces tax owing but is not refunded if you owe no tax.
• 02First-time buyer: neither you nor your spouse or common-law partner lived in another home that either of you owned in 2026 or in any of the four preceding years (2022 to 2025), inside or outside Canada.
• 03Qualifying home: located in Canada and registered in your name or your spouse's or common-law partner's name. Houses, condominiums, townhouses and similar homes qualify. You must intend to live in it as your principal residence within one year of buying it.
• 04Sharing: spouses or co-owners can split the claim, but the total for one home cannot exceed $10,000.
• 05Home office link: the home you bought can also be where your office is. The home buyers' amount and the home office deduction are separate claims, and you can make both.

Other first-time buyer programs, such as the BC property transfer tax first-time home buyers' exemption, the RRSP Home Buyers' Plan and the First Home Savings Account (FHSA), are reported separately; ask us if you used any of them.

What to have ready

Home office

• 01A simple floor plan with the size of your office and the total size of your home
• 02The date you started using the office for your business
• 03Utility bills (electricity, gas or heat, water) and home internet bills
• 04Your home insurance policy and premium, and receipts for repairs and maintenance
• 05Your annual mortgage interest statement and property tax notice (homeowners), or rent receipts (renters)

Home purchase

• 01The statement of adjustments from your lawyer or notary
• 02The title or land registry record showing the owners' names
• 03Confirmation that you and your spouse or partner did not own and live in another home from 2022 to 2026
• 04Details of any RRSP Home Buyers' Plan or FHSA withdrawals used for the purchase