T2200 questions

[bluebelle]

help!
Tax year 2017 is the first year I 'officially' work from home (got a T2200 form from my employer)
I am salary, not commission; they checked off that I need to pay for office supplies and that I work from home 100%.  They listed out travel expenses that I was reimbursed for (couple of business trips, not on my T4)
Questions:
1) I have a room in my house that is my 'office', so I think I just declare the square footage of it divided by the square footage of my home (do I use square footage of the main floor or do I include the square footage of the finished basement?).  I use other parts of the house during part of the day (bathroom, kitchen), do I include any of that?
2) since we own our own home, I think I can only claim a portion of internet, electrical, heat and water?  Not property taxes since I'm not commission based?  I guess I can claim 100% of the land line, since we only have it for my work.
3) am I reading it correctly, I can't claim a portion of my property taxes since I'm not commission based?

Am I missing anything?  It doesn't look like a huge benefit (but better than nothing).

[Missy B]

Hi Bluebelle-
I'm used to the sole proprietorship (T2125) forms, which will be similar. Can't answer about the commission vs salary question, but otherwise:
1) as you thought, divide the square footage of the room you use by the total square footage of the house. Including the basement. Whatever percent that is, multiply by the total costs of heat and hydro, cleaning etc. Maintenance costs. The designated work landline. That is assuming the space you use for the office is used for that 100% of the time, 24 hours a day. If it isn't, Rev Can wants you to correct it accordingly.

2) Anytime you deduct mortgage interest (I'm betting you can't in your situation, but as self-employed you could) you trigger capital gains payable on the % of the house you used for the time you used it. In a hot retail market like Vancouver, this is the worst idea ever. So even if you can, don't. Unless you are expecting to take a loss when you sell your primary residence. And no deducting property taxes either.

3) Receipts for everything. A document from your employer (if this is not stated in your contract) that says they require you to have a dedicated work landline and what that number is, would be good to have.

[daverobev]

I was of the understanding that both mortgage *interest* and property taxes are deductible as a percentage, as is insurance, electric, gas, maintenance, etc.

What you don't want to do is depreciate the percentage of the house used for work, ie claim capital cost allocation. THAT triggers cap gains/recapture.

That is on a T2125 not employee. If I bought a larger house in order to have a room to work in, that leads to higher property taxes. No reason I can see that that would not be deductible.

You can either do square foot percentage, or number of rooms, as long as the calc is reasonable. And yes, if you convert the room into a sewing den over the weekends you must prorate.

Capital improvements - no. So upgrading the kitchen to granite (increases resale value), no. Replacing broken kitchen stuff with similar, yes. Not that you likely would for a kitchen, but I claimed (a percentage of) a driveway and new furnace a couple of years back, I believe. I read through everything - I had a driveway, it needed replacing, we replaced it. Ditto the furnace. Neither is likely to significantly increase the resale price.

[Missy B]

Alright. I looked up the guide:

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4044/t4044-17e.pdf

and on page 9 is the description of allowed expenses for employees. (Page 7 of the guide has expenses for commission staff; they are similar, but different.) I think that part of the guide is worth reading, Bluebell, you might find you have some other things you can write off. Anyway.

From Guide t4044 Chapter 3, Page 9, Employees Earning a Salary, Work-Space-in-the-Home Expenses:

You can deduct the part of your costs that relates to your
work space, such as the cost of electricity, heating, and
maintenance. However, you cannot deduct mortgage
interest, property taxes, home insurance, or capital cost
allowance.

Now, if you are on commission you are allowed to deduct property taxes and home insurance, as Dave thought, but not mortgage interest or CCA. It seems that the govt views commissioned staff as being more like self-employed, as they don't have a guaranteed salary.

[daverobev]

Huh. Well, I'll admit, there are a fair few things that don't make much sense to me in the Canadian system. I'll just add this to the list.

I mean, if you bought a larger home specifically because you needed an extra room to work from home... eh I guess you should be asking your employer to give you an allowance, not the government. Ok. That kind've clicks.