Business-use-of-home expenses

If you use your home for your daycare business, you may be able to claim part of the expenses of running your home, such as:

• electricity
• heat
• water
• insurance
• maintenance
• mortgage interest
• property taxes
• rent

You have to calculate which part of the total expenses related to running your home is for business use and which part is for personal use.

To calculate the part you can deduct, use a reasonable basis, such as the area used for the daycare divided by the total area of your home.

You will have to reduce the amount you can deduct if you use the rooms for both your daycare and personal living. For detailed information and examples, see Rooms used for daycare.

The amount you can deduct for business-use-of-home expenses cannot be more than your net income from the business before you deduct these expenses.

In other words, you cannot use home expenses to create or increase a business loss. However, you can deduct these excess expenses from daycare income in a future year, as long as you are still using your home for daycare and these expenses would not create or increase a business loss in that year.

Report these expenses on line 9945 of Form T2125, Statement of Business and Professional Activities.

Forms and publications

• Booklet P134, Using Your Home for Daycare
• Form T2125, Statement of Business and Professional Activities