Farmers, don't miss out on this tax deduction
Maximizing your Return by Claiming Office in the Home Deduction
As with all expenses you incur, if they can reasonably be attributed to the income you generate from your business then they can be deducted from said income. This is also applicable to those expenses that could at times be considered personal.
Office in the home is an additional tax deduction that allows farmers to write off the use of their home to run the farm.
What can be written off?
- Interest on mortgage payments
- Property tax
How does it work?
All office in home expenses must be given a percentage of business use based on the size of the office relative to the entire house. The percentage ranges between 5% and 25%. It can be challenging to determine how much of the expense relates to the house, as most of the bills usually include a portion that relates only to the farm. Don't hesitate to contact the Ag Team for consultation.
Farmers operate a business that tends to use the property they live on to generate income. For this reason, things like utilities can include both the barns and the house. Property tax usually includes both the farmland and the house.
The same can be said for mortgage interest and insurance.
When making a claim for office in home be sure to check the wording on the statements. Property tax has a calculation for the “residential portion” of the amount owing. Insurance tends to separate the house from all other property covered under the plan.
In cases where there is a hydro meter reading for farm buildings and a meter for the house, be sure to separate those expenses; otherwise, a percentage of the total cost of the utilities is used to determine personal portions. As for mortgage interest, if it isn’t already separated, a percentage of the house relative to the total purchase price of the farm can be used to determine personal portions.
Claiming office in the home is a simple way of maximizing your tax return.
Don't miss out on this additional tax deduction, claim it now!