How does an employee claim home office expenses for the 2025 tax year?
For 2025, employees can claim home office expenses only with the detailed method; the $2 a day flat rate ended after 2022. Your client must work from home more than 50% of the time for four consecutive weeks or use the space only for work and client meetings, get the employer's signed T2200, and file T777 for line 22900.
What your client needs for a 2025 claim
The temporary flat rate of $2 a day covered 2020, 2021 and 2022 only. From the 2023 tax year on, every eligible employee uses the detailed method and claims a share of actual costs canada.ca. The short forms went with it: Form T777S and Form T2200S are labelled for 2020, 2021 and 2022 only, so a 2025 claim uses the full Form T777 and Form T2200
canada.ca.
Your client has to meet every row below. The work space test has two branches, and one is enough.
| Condition | What the CRA asks for |
|---|---|
| Required to work from home | Employer requirement, written or verbal; a formal telework arrangement your client entered voluntarily also counts |
| Paid the costs | Your client paid the work space expenses and the employer didn't and won't reimburse them |
| Work space test, branch 1 | Worked more than 50% of the time from the home work space for at least four consecutive weeks in the year |
| Work space test, branch 2 | The space is used only to earn employment income and regularly and continually for in person meetings with clients or others |
| Used directly in the work | The expenses relate to the space used for the job |
| Employer form | A completed Form T2200 signed by the employer |
Those conditions come from the CRA's detailed method page, which also says a client with more than one qualifying period in the year can claim for each one canada.ca. The legal source is subsection 8(13) of the Income Tax Act: the space must be where the employee principally performs the duties, or used exclusively for the employment and regularly for meeting customers
laws-lois.justice.gc.ca.
What salaried and commission employees can deduct
The split that trips up most returns is ownership costs. A salaried employee who owns the home gets nothing for property tax, home insurance or mortgage interest. A commission employee gets property tax and insurance, but still no mortgage interest canada.ca.
| Expense | Salaried | Commission |
|---|---|---|
| Electricity, heat, water | Yes | Yes |
| Utilities portion of condo fees | Yes | Yes |
| Home internet access fees (a reasonable plan) | Yes | Yes |
| Maintenance and minor repairs | Yes | Yes |
| Rent, if your client rents | Yes | Yes |
| Office supplies used up in the work | Yes | Yes |
| Home insurance | No | Yes |
| Property taxes | No | Yes |
| Lease of a cell phone, computer or tablet | No | Yes |
| Mortgage interest or principal | No | No |
| Capital cost allowance | No | No |
| Furniture and capital items (a new furnace, windows) | No | No |
Internet connection fees and the modem or router rental part of the bill aren't deductible, and condo fees count only for the utilities portion your client can actually calculate. A commission employee's total expenses can't exceed the commissions received in the year canada.ca. If commissions fall short, the CRA lets your client claim as a salaried employee instead
canada.ca.
Working out the employment use percentage
Start with area: the work space in square metres divided by the finished area of the home. A 40 m² space in a 400 m² home is 10% canada.ca. What happens next depends on how the space is used.
| Space | Formula | CRA style example |
|---|---|---|
| Designated room, used only for work | Area % (hours don't matter) | 20 m² spare room in a 200 m² house: 10% |
| Common area, also used for living | Area % × work hours ÷ 168 | Dining room at 12% of the home, 40 hours a week: 12% × 23.8% = 2.8% |
| Space shared by two workers | Each takes their own share of the area, then applies their own hours if it's a common area | 12 m² room split in half in a 100 m² home: 6% each |
Apply the percentage to costs for the whole home (rent, utilities, internet). Costs that relate only to the work space, such as painting that room, are claimed at the employment use share of that space itself, which is 100% for a designated room. A client who moved partway through 2025 runs one calculation per home and adds them canada.ca.
Worked example: a salaried employee renting an apartment
Your client is a salaried employee who worked from home all of 2025 under a written requirement from the employer. The spare bedroom is 12 m² and used only for work. The apartment has 96 m² of finished area, so the room is 12 m² ÷ 96 m² = 12.5% of the home.
| Item | 2025 cost | Share | Claim |
|---|---|---|---|
| Rent ($1,800 × 12) | $21,600 | 12.5% | $2,700.00 |
| Electricity, heat and water | $1,680 | 12.5% | $210.00 |
| Home internet plan | $960 | 12.5% | $120.00 |
| Whole home subtotal | $24,240 | 12.5% | $3,030.00 |
| Paint for the office only | $80 | 100% | $80.00 |
| Paper and toner used up | $120 | 100% | $120.00 |
| Total employment expenses | $3,230.00 |
Now change one fact. If the same 12 m² were a dining area used 40 hours a week instead of a closed office, the whole home share drops to $24,240 × 12.5% × 40 ÷ 168 = $721.43. The designated room is worth about four times as much on identical costs.
Change another. If your client owned the home and earned commissions, property tax of $4,800 and home insurance of $1,440 would add $6,240 × 12.5% = $780.00, within the commission income cap. A salaried owner gets $0 for both, and neither type of employee gets mortgage interest.
The CRA's own 2025 example in Guide T4044 runs the same way: a designated room at 20% of a rented apartment, $3,700 of utilities and internet plus $7,500 of rent, gives $2,240 before a $60 maintenance item canada.ca.
Edge cases you will hit
Losses: work space expenses can't create or increase a loss from employment. The excess carries forward, and your client can deduct it the next year as long as they report income from the same employer canada.ca. Paragraph 8(13)(b) caps the deduction at income from that office or employment, and 8(13)(c) carries the excess to the next year
laws-lois.justice.gc.ca.
Partial reimbursement: your client can still use the detailed method, but only for costs the employer did not and will not reimburse canada.ca.
Employment and business income from the same space: divide the expenses on a reasonable basis between the two, and claim each work space separately if your client changed spaces during the year canada.ca.
Paper trail: Form T777 is filed with the return and its line 9368 total goes on line 22900. The T2200 is not filed. Your client keeps it with the receipts for six years canada.ca. The 2025 editions of both forms are on the CRA forms pages (
canada.ca,
canada.ca).
How a sole proprietor claims instead
A client with business income doesn't use the T2200 or T777 at all. Business use of home expenses go in Part 7 of Form T2125 and onto line 9945, and the test is different: the space must be the principal place of business, or used only for the business and regularly to meet clients, customers or patients canada.ca.
| Point | Employee (T777) | Sole proprietor (T2125 line 9945) |
|---|---|---|
| Main test | More than 50% of the time for four consecutive weeks, or client meetings | Principal place of business, or client meetings |
| Employer form | T2200 required | None |
| Mortgage interest | Never | Yes, the business share |
| Property tax and insurance | Commission employees only | Yes |
| Capital cost allowance | Never | Allowed, with recapture and capital gain risk on a later sale |
| Loss limit | Can't create an employment loss; carry forward | Can't create a business loss; carry forward |
For the filing dates that go with business income, see the sole proprietor deadline page.
Sources
Can my client still use the $2 a day flat rate for 2025?
No. The temporary flat rate method does not apply to the 2023 and later tax years, so a 2025 claim must use the detailed method with Form T777 and a signed T2200 canada.ca.
Does a hybrid schedule pass the more than 50% test?
Yes, when home days are more than half of the days your client actually works, for at least four consecutive weeks. The CRA's 2025 examples treat an employee required to work from home three days a week as eligible, and a part time employee working two of three days at home as eligible, while one home day out of three fails canada.ca. Below 50%, the claim depends on branch 2: the space is used only for work and regularly for meetings with clients or others.
Does the T2200 get filed with the return?
No. Your client keeps the signed T2200 and the receipts for six years in case the CRA asks; only Form T777 goes in with the return canada.ca.
Can a salaried employee who owns the home deduct mortgage interest?
No. Mortgage interest is not deductible for salaried or commission employees, and a salaried employee can't deduct property tax or home insurance either canada.ca.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.