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  1. #1
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    Default Deductions for Home Renovations and Expenses

    Hi! I teach music lessons in my home and I have a large part of my house set up for that purpose alone. I am a bit confused about how to claim money that I spent on repairing the house (new windows in that room) or generally maintaining it so that I can run the business.

    I know this is somewhat complicated. I would like to take care of filing the taxes by myself. Is there a resource that you can recommend for me to read to do this properly?

    Thanks for all the help you give here.
    www.myc.com/teacher/BMcLachlin
    If I want a child's respect...I must first give him mine.

  2. #2
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    Hi there,

    You can generally claim the costs of regular maintenance (light bulbs, cleaning supplies, instrument tuning, cleaning service, snow removal for clients etc) you can directly link to the business. One method of traking is to simply take what you've spent on these things for the year for the entire house and apply a reasonable % to that particular room / area. The same way you would for property taxes, interest on mortgages, utilities etc.

    Reno's are tough because if questioned you need to argue that the new window (or flooring or whatever) is required for the business - not just something you did to improve the house for yourself. It's always a question of fact and on balance of what seems reasonable. There isn't a specific list of things that absolutely are or aren't deductible. It seems to me that it would be easier to argue the cost related to the business if it was just that window replaced vs. having every window in the house replaced (with the music room included) which suggests more of a cosmetic upgrade to your entire residence which is personal. Not sure I'm making a great distinction here ... but hope you can start to think of them in this way.

    Ultimately it's up to you to decide what to claim based on what you believe is reasonable. Worst case scenario is you claim it and it's denied - there isn't any flag that goes up on your account and no auditor will be knocking on your door .... you'd simply need to pay the extra tax.

    Hope that gets you started

    ETA: CRA's guide on home business operations (on their website) gives some good examples of how they look at deductions - a few are a bit extreme but it gives you a sense of where to start.

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