QUESTION: I'm a remote employee working out of a home office. I'm not a commissioned sales person. I would select yes to question 9.a on the T2200 form where asked if I am required to rent or use my home office away from ones place of business. the question is "Can i claim mortgage interest and home insurances as a deductible expense?" thank you ======================= david ingram replies: In Canada, an employee can NOT deduct mortgage interest and home insurance as the following extract from page 9 of the Employment expense guide shows: Chapter 3 - Employees Earning a Salary On this page... Deductible expenses Accounting and legal fees Allowable motor vehicle expenses (including capital cost allowance) Travelling expenses Parking Supplies Other expenses Work-space-in-the-home expenses ---------------------------------------------------------------------- ---------- This chapter describes the expenses you can deduct if you earn a salary. If you earn commission income, see Chapter 2. Work-space-in-the-home expenses You can deduct expenses you paid in 2004 for the employment use of a work space in your home, as long as you had to pay for them under your contract of employment. These expenses must be used directly in your work and your employer has not reimbursed and will not reimburse you. Also, you must meet one of the following conditions: The work space is where you mainly do your work. You use the work space only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients or customers. You can deduct a part of your maintenance costs, such as the cost of electricity, heating, and cleaning materials. However, you cannot deduct mortgage interest, property taxes, home insurance, or capital cost allowance. To calculate the percentage of work space expenses you can deduct, use a reasonable basis, such as the area of the work space divided by the total area. If your office space is in a rented house or apartment where you live, deduct the percentage of the rent and any maintenance costs you paid that relates to the work space. The amount you can deduct for work-space-in-the-home expenses cannot be more than your employment income after you deduct all employment expenses except work space expenses. You cannot use work space expenses to increase or create a loss from employment. You can only deduct work space expenses from the income to which the expenses relate, and not from any other income. If you cannot deduct all your work space expenses in the year, you can carry forward the expenses to the following year, as long as you are reporting income from the same employer. However, you cannot increase or create a loss from employment by carrying forward work space expenses. Interpretation Bulletin IT-352, Employee's Expenses, Including Work Space in Home Expenses, has more information. You can read the whole bulletin at: http://www.cra-arc.gc.ca/E/pub/tg/t4044/t4044-04-e.html#P348_27523 Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth Management and I, David Ingram host a LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Local calls are taken at (604) 280-0600 and Long Distance calls (BC only) are taken at 1( 866) 778-0600 Callers to the show are invited to attend free seminars on financial planning with such specialities as deductible mortgage interest. They are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900 for more information. ========================================= David Ingram's US/Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Res (604) 980-3578 Cell (604) 657-8451 (604) 980-0321 Fax (604) 980-0325 Email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com> www.david-ingram.com <http://www.david-ingram.com/> Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. 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