Article provided courtesy of

Virginia Tinti, Barrister and Solicitor
303 Robinson Street,
Oakville, Ontario L6J 1G7

Office: 905-815-1717

“Home Offices” – Tax Implications

In cases where a homeowner has an office in the dwelling for business purposes, and chooses to avail himself or herself of available deductions for a portion of mortgage

interest or for depreciation, the homeowner should be aware that such deductions could trigger capital gains tax on the resale of the dwelling on a portion of the sale price. In addition, the proportion of the property which is deemed a “commercial” use could be subject to Goods and Services Tax (“GST”) on the sale of the property. In such cases, the homeowner should ensure that he or she obtains advice from a qualified accountant or solicitor as to the resulting tax issues. Homeowners should also ensure that any home office is permitted by the zoning by-laws applicable to the property. If prospective purchasers anticipate that a portion of the property will be used for a home office, they should advise their real estate agent and lawyer of this fact prior to signing the   agreement of purchase and sale. Often agreements of purchase and sale stipulate only that use as a “single family residential” property is permitted. If other uses are required, it is essential that the agreement of purchase and sale specify what uses are required.