Homeowner

When Does Mortgage Affect Your Taxes?

Many of us wonder if we can claim a credit for mortgage payments or at least the interest paid.  CRA looks at your mortgage as a personal expense that does not qualify for any credits. However, if you run a business from home or if you are eligible to claim employment expenses, you might be able to claim the interest paid on your mortgage.

Home expenses for landlords and self-employed

If you run your own business at home as a self-employed, you will file a business return with your income tax return. When you work from home, you can claim home-office-expenses such as utilities, maintenance, home insurance, and much more.  If you own your home, you can claim the mortgage interest and the property taxes that are related to the section of the house you used for business.

For example;

If your total house size is 2500 ft2, and your office space is 300 ft2, you can claim the following percentage of your home expenses:

Percentage of house use = 300 / 2500 = 12%

If you earn income from a rental property, you can claim the full amount of the mortgage interest, property taxes, and home insurance. If you are renting a section of your principal residence, you claim a percentage of the expenses that correspond to the rented space.

Home employment expenses

There are many variables to employment expenses. The most common ones that can claim home-office expenses are the salaried employees and the commissioned employees.

As a salaried employee, you can only claim the mortgage interest. As a commissioned employee, you can claim the mortgage interest, the property taxes, and the insurance. You are limited not only by the home use percentage but also by the commission paid since your expenses cannot exceed your commissions.

TurboTax is the number one selling software in Canada. From do it yourself to do it for me – we have you covered. From the first time filers to tenured individuals, we have every possible tax situation addressed. Here is everything you need to know about our software and our support options.