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The Tax Implications of Using Your Garage for Business

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The Tax Implications of Using Your Garage for Business

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When you operate a business from home you save not only the expense of renting an office, but also tax dollars.

Provided you meet specific requirements, you can deduct at least a portion of the cost of utilities, rent, depreciation, home insurance, and repairs in addition to your regular business expenses. Many people believe that such tax deductions are only available for rooms within the home, but there are viable alternatives, like working from a separate space such as a garage, workshop, or home studio.

Before claiming these deductions, however, there are two tax law requirements you need to be aware of.

The Tax Implications of Using Your Garage for Business

Regular and Exclusive Use

While the requirements vary slightly between Canada and the U.S., both the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) stipulate that, to qualify for deductions, you must regularly use part of your home exclusively for a trade or business. The definition of this can be vague for some people. The IRS defines this requirement as using a part of your home for business on a continuing basis — not occasional or incidental business. A few hours a day most days is usually enough to meet this requirement. Exclusive use means that you use a portion of your home only for business and nothing else. If you use a room of your home for personal as well as business reasons, you do not meet the requirement.

Principal Place of Business

To meet the second requirement, you must be able to demonstrate that your home is your principal place of business. For example, you meet patients, clients, or customers at home. You can also use a separate structure on your property — such as a garage — exclusively for business purposes. This is simple to prove if you do indeed conduct your business only from home.

And your garage door?

If you’re using your garage space for your business, be sure you have the best garage door to be comfortable. Do you need a garage door with the best insulation and airtightness factor? Or, would you rather to have one with a panoramic vision? Garaga doors can meet your needs. Consult our website to choose from a large variety of products.

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