Those crazy Americans.
Did you know they get to use the interest they pay on their mortgage as a tax deduction?
Just like any tax deduction, there are rules and strict applications but our U.S. friends do get to claim their mortgage interest on their tax return.
That isn’t so in Canada.
Unless you run a home-based business.
The Canada Revenue Agency allows you to claim a deduction for part of your mortgage interest as part of your work-space-in-the-home expenses.
Remember that the work space must be:
- Your principal place of business
- A space dedicated to earning your business income, used on a regular and ongoing basis to meet clients, customers or patients
More good news
Oh, you wanted to know about another deduction you can add to your home-business expenses?
Put property taxes on the list.
That’s right. You can also deduct a portion of the property taxes you paid in 2012 for the property.
Your mortgage interest and your property taxes fall under the list of other eligible expenses, such as utilities, maintenance and repairs.
That means you can deduct only a portion of these expenses. The amount is pro-rated according to the amount of space used and the amount of time you use that space for business purposes.
You can’t use your business expenses to increase or create a business loss.
You can, however, carry forward to next year any use-of-home expenses you couldn’t deduct this year, as long as your business use continues to meet the criteria.
Can you help?
We sure can. We specialize in small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill our our contact form or give us a call at 403-226-8297.