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By: Adrian Mastracci
Contributing Writer
North Shore News
Business Section, "Ask Money Questions"
Sunday, April 7, 2002
Question: I have a business office
at home. What are the rules concerning deducting
home expenses?
Answer: If you use office space in your home to earn income you'll need to meet one of two tests before claiming deductions pertaining to the space used. The test is that the office in your home is either your principal place of business, or if it is not, then it must both be used exclusively for earning business income and also used on a regular and continuous basis for meeting your clients.
The deductions generally include the pro-rata share of the home operating expenses such as utilities, repairs, insurance, interest, and property taxes. However, it is suggested that capital cost allowance not be taken as it affects the principal residence exemption when you sell the home.
Question: I have realized capital losses which I cannot use for 2001. What are my options?
Answer: Capital losses that arose in 2001 must first be used against capital gains realized in 2001. You then have two options for the unused net capital loss. They can then be carried back three years and carried forward indefinitely. If you carry back, they are applied to capital gains of the previous three years. If there were no capital gains in the previous three years, or you still have a net capital loss after the carry back, then the balance can be carried forward indefinitely and applied towards future capital gains. Form T1A is used to carry back the losses to previous years.
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