If you operate a home-based business, the Canada Revenue Agency (CRA) will usually allow you to report certain “office-in-home” expenses. The portion of heat, insurance, electricity, property taxes, and mortgage interest that you may report must be (in the language of the CRA) “reasonable under the circumstances.”
Rose uses 2 of the 11 rooms in her home for her real estate appraisal business. The combined floor area of the 2 rooms is 36 m2. The remainder of the house has an area of 147 m2. Rose’s total expenses in the home-related categories were $17,512 for the year. What amount will qualify as “office-in-home” expenses if the proration is based on:
a. The number of rooms used for the business?
b. The floor are a devoted to business use?