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How to claim the workspace-in-home deduction on T2125 — eligible expenses, the square footage formula, and key CRA rules for Canadian real estate agents.
Updated March 2026 · Realtor home office deduction Canada · 7-minute read
Most Canadian realtors work primarily from home — making calls, writing offers, doing market research, and managing client relationships. The workspace-in-home deduction allows self-employed realtors to deduct a portion of their home expenses as a business cost. This deduction can reduce taxable income by $3,000–$100+ per year depending on your home costs and office size.
To claim a workspace-in-home deduction on T2125 (Part 7), your home workspace must meet one of two conditions:
Most realtors satisfy condition 1 easily — their home office is where they do the majority of their paperwork, client communication, and administrative work. The key word is "exclusively" — a dedicated room used as a home office qualifies; a kitchen table used sometimes for work does not.
The CRA requires the workspace to be used exclusively (or almost exclusively) for business purposes. A dedicated spare bedroom converted to an office works. A corner of your living room where you also watch TV does not. Invest in a door. Document the space with photos. Do not have a guest bed in your "office."
The deduction is calculated using the square footage method:
Business-use % = Office sq ft ÷ Total home sq ft
Apply this percentage to eligible home expenses to get your deductible amount.
| Expense | Renters | Homeowners |
|---|---|---|
| Rent | Yes — business % of annual rent | N/A |
| Mortgage Interest | N/A | Yes — business % of annual interest |
| Property Tax | N/A | Yes — business % |
| Home Insurance | Yes — business % | Yes — business % |
| Utilities (heat, hydro, water) | Yes — business % | Yes — business % |
| Internet (home portion) | Yes — business % | Yes — business % |
| Maintenance & Repairs | Business % of general repairs | Business % of general repairs |
| Capital improvements | No | No (CCA may apply separately) |
| Mortgage principal | N/A | No |
Your workspace-in-home deduction cannot create or increase a business loss. If your net business income (before the home office deduction) is $15,000 and your calculated home office deduction is $20,000, you can only deduct $15,000 this year. The remaining $5,000 carries forward to the next tax year indefinitely. Track your carry-forward amounts carefully — they can accumulate and be used in high-income years.
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