What are the rules about writing off your home?

If you operate a business from your home, then you may be able to write off part of your house. The general rule is that it:

  1. It is your main (principal) place of business
  2. 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

The expenses you can write off include:

  • Utilities (heat, power, water)
  • Rent
  • Mortgage interest
  • Home insurance
  • Property taxes
  • Home phone

To determine the amount of the write off, you need to calculate the percentage that you use in your home.

First, determine your total square footage of your home.

Next, determine the approximate amount of square footage that you use for your business.

Next, calculate that percentage.

Finally, apply that percentage to your costs.

Below is an example of how this will work to home expenses.

You can easily record your expenses on a single form that we recommend from our partners at Learn Bookkeeping Canada.

To download this form, click here:

http://www.learnbookkeepingcanada.ca/p/homeexpenses

How do you enter this into DIY Expense Tracker?

STEP #1

Click on “SETTINGS” in the left hand menu.

STEP #2

Click on “EXPENSE TYPES” in the menu options.

STEP #3

Find your home based expenses categories, and click on them to open them up so that you can change the information.

STEP #4

Fill out the % that you wish to claim.

Note that the first line requires you to manually type in the amount if you wish it to be displayed on your reports.

STEP #5

Go back to your EXPENSES entry screen.

Choose the spending account that you desire.

STEP #6

Enter the amounts at 100% of the billing.

The program will determine the appropriate percentage on your reports.