Overview
Under section 8(13) of the Income Tax Act, employees who are required to work from home can deduct a proportional share of home expenses directly from their employment income. The deduction reduces your taxable income dollar for dollar — at a 43% combined marginal rate, $10,000 in eligible home expenses generates $4,300 in tax savings.
The requirement is a signed Form T2200 (Declaration of Conditions of Employment) from your employer. Most remote and hybrid employees qualify — and most never ask for it or claim it.
The COVID-era temporary flat rate ($2/day) was eliminated after the 2022 tax year. For 2023 onwards, the detailed method with T2200 is the only option for employees.
Do I Qualify?
- You were required to work from home by your employer (not just choosing to do so voluntarily) — your employer must be willing to sign Form T2200 confirming this
- You paid for home office expenses yourself and were not reimbursed by your employer
- Your home workspace was used more than 50% of the time for employment purposes during the period you worked from home, OR was used exclusively for work and for regular client/customer meetings
Remote employees working full-time from home easily meet the 50% test. Hybrid workers at 3+ days/week typically qualify. Employees who primarily work at a company office generally do not.
What Employees Can Deduct
Regular (non-commissioned) employees can claim:
- Rent (proportional share)
- Electricity, heat, and water (proportional share)
- Internet access fees (proportional share)
- Maintenance and minor repairs (proportional share)
- Cleaning supplies used in the home office
Regular employees cannot claim:
- Mortgage interest
- Property taxes
- Home insurance premiums
- Capital expenditures (furniture, computers, monitors — these are not deductible for employees under any method)
Commissioned employees (whose pay is partly or fully commission-based) can claim everything above plus:
- Mortgage interest (proportional share)
- Property taxes (proportional share)
- Home insurance premiums (proportional share)
Calculating Your Deduction
Your eligible deduction is:
(Home office area ÷ Total home area) × Total eligible expenses
Example — Regular employee, renter:
- Home: 900 sq ft total; office: 135 sq ft (15%)
- Annual rent: $24,000
- Annual utilities: $2,400
- Annual internet: $900
- Total eligible expenses: $27,300
- Deduction: 15% × $27,300 = $4,095
- Tax savings at 43%: ~$1,760
Measuring your workspace: Use the floor area of the space you use as your office. If the room has multiple uses (e.g., a spare bedroom used as an office), you can still claim it, but CRA expects the 50% employment use test to be met based on actual hours of use.
Shared spaces: A dedicated room qualifies in full if it meets the 50% employment use test. Common areas (kitchen, bathroom, living room) do not qualify.
The T2200 Process
- Ask your employer for a signed Form T2200 for the tax year. Your employer is not required to provide it, but most will if you ask HR.
- Your employer confirms on the form: your employment conditions, whether you were required to work from home, and whether you were reimbursed for expenses.
- You keep the T2200 — you do not file it with your return, but CRA may request it on audit.
- Complete Form T777 (Statement of Employment Expenses) to calculate your deduction.
- Enter the result on line 22900 of your T1 return.
What Most People Miss
- “Required to work from home” doesn’t mean a written policy. If your employer told you to work from home — even verbally or informally — and your T2200 reflects that, you qualify. The requirement can be explicit (company policy) or implicit (no desk at the office).
- Internet is deductible. Your home internet bill qualifies proportionally. If your home office is 12% of your home, 12% of your annual internet cost is deductible.
- You don’t need a dedicated room. A defined workspace in a bedroom, basement, or living area qualifies — as long as it meets the 50%+ employment use test. Exclusive use is not required for the 50% test.
- Renters often deduct more than homeowners under the employee rules (since mortgage interest and property taxes are not claimable), but rent is directly deductible as a proportional share — which can be significant in high-rent cities.
- Partial-year remote work still qualifies. If you worked from home for 8 months and in-office for 4, you can claim the home office expenses for the 8-month period.
Frequently Asked Questions
My employer won’t sign a T2200. Can I still claim?
No. The T2200 is a mandatory requirement for the detailed method. Without it, you cannot claim employment-related home office expenses. If you believe you qualify and your employer is refusing, discuss with HR — most employers will sign if you genuinely worked from home as required.
I own my home. Can I deduct mortgage payments?
No — regular employees cannot deduct mortgage interest or principal. Only commissioned employees can deduct mortgage interest (not principal repayment). Homeowners who are regular employees can still deduct utilities, internet, rent on a secondary suite, and maintenance costs proportionally.
I bought a desk and monitor for my home office. Are those deductible?
Not as employment expenses — CRA does not allow employees to deduct the capital cost of equipment (furniture, computers, monitors). If your employer reimbursed you, that’s a separate matter. Some employees negotiate a home office allowance from their employer, which is a better route for equipment costs.
My employer gave me an allowance for home office expenses. Does that affect my claim?
If your employer gave you a non-accountable allowance (included in your T4 as income), you can still claim your actual expenses. If you received a reimbursement for specific expenses (not included in T4 income), you must reduce your claim by the amount reimbursed.
I work hybrid — some days at the office, some at home. Do I qualify?
Yes, if you meet the 50% test. Count the hours you actually used your home workspace for employment purposes across the year. If you worked from home 3 out of 5 days each week, you’re at 60% and clearly qualify. CRA looks at the full year, not week by week.