Home-Based Business Tax Tips: From Utilities to Home Office Write-Offs — CPA Firm Near You, Montreal

Introduction

Home-based businesses in Quebec — whether operating as freelancers, consultants, online sellers, contractors, or service providers — enjoy lower operating costs but face unique tax rules. Properly claiming home-office expenses, utilities, equipment, and internet can significantly reduce taxable income, but CRA and Revenu Québec scrutinize these deductions heavily. This guide explains how home-based entrepreneurs can maximize write-offs safely and how a CPA firm near you in Montreal can help ensure full compliance.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, home-based businesses may deduct expenses only if the workspace is:
• The principal place of business, or
• Used regularly and exclusively to earn business income

Home-based business deductions may include:
• Utilities (heat, electricity, water)
• Internet and cellphone (business-use percentage)
• Home insurance
• Rent or mortgage interest (Quebec rules apply)
• Property taxes (when eligible)
• Condo fees (proportional use)
• Cleaning and maintenance
• Home-office furniture and equipment
• Depreciation (CCA) on computers, office equipment, and tools

GST/QST ITCs/ITRs may be claimed on allowable home-office expenses for registered businesses.

Key Court Decisions

Courts have ruled that:
• Home-office deductions require exclusive and regular business use — a shared family space is generally not deductible
• Mortgage principal is not deductible
• Repairs affecting the entire home must be prorated
• Depreciation must be reasonable and tied to business use
• Vague or estimated utility percentages are often denied
• Businesses must demonstrate operational presence (clients, work output, records, etc.)

Judges emphasize clear separation between personal and business use.

Why CRA and Revenu Québec Target Home-Based Businesses

Audits are common because home-based entrepreneurs often:
• Claim large portions of their home without proof
• Mix personal and business utilities
• Use aggressive deductions unsupported by documentation
• Fail to allocate percentages properly
• Claim repairs and renovations that benefit the entire home
• Miss GST/QST obligations due to informal operations
• Fail to maintain business revenue logs

Auditors compare utility bills, floor plans, invoices, and business records.

Mackisen Strategy

At Mackisen CPA Montreal, we help home-based businesses optimize deductions while minimizing audit exposure. We:
• Calculate accurate business-use percentages
• Prepare home-office worksheets for CRA and RQ
• Track utilities, internet, and phone expenses properly
• Separate personal vs business costs
• Determine eligibility for mortgage interest, rent, or property taxes
• Set up GST/QST systems for home businesses
• Prepare depreciation schedules for equipment and tools
• Build audit-ready documentation for your workspace

Real Client Experience

A Montreal online retailer claimed 45 percent of her home as a business workspace with no measurements. CRA denied most of the deduction. We recalculated based on actual square footage and recovered fair deductions. Another consultant lacked proof for internet and utility splits; we developed logs and billing support to validate percentages.

Common Questions

Can I deduct rent or mortgage interest?

Yes — proportional to business use. Mortgage principal is not deductible.

Do I need a dedicated room?

For maximum deductions, yes — exclusive use is required.

Can I deduct renovations?

Only renovations that relate specifically to your business workspace.

Do I need GST/QST registration?

Yes, once annual revenue exceeds the small-supplier threshold.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps home-based entrepreneurs operate tax-efficiently and compliantly. Whether you run an online store, consultancy, or creative business, our expert team ensures precision, transparency, and audit protection.