Nearly one-third of Canadians worked from home between April 2020 and June 2021 because of the COVID-19 pandemic. While many workers are returning to the office, many offices are continuing to offer flexible work options to keep good employees.
The increase in remote work means more people qualify for work-from-home deductions on their income taxes.
Residents who recently transitioned to remote work may approach condo managers with a variety of tax questions. Many of them require documentation for various expenses.
But what are a condo manager’s responsibilities, and how can they help residents with their tax deductions? Read on to find out.
Understanding the Temporary Simplified Method
The CRA introduced a temporary simplified method for claiming work-from-home deductions on your tax returns for the 2020 tax year. This provided an easy procedure for employees who worked remotely for at least a month to claim expenses. They simply need to fill out a T2200S form for a tax deduction of $2 each day they work at home, up to $400.
However, the temporary flat-rate deduction won’t apply for income earned in 2021 unless the government decides to extend the program. Canadians who want to claim work from home expenses for this year can still use the traditional detailed method to calculate their expense.
While this requires certain forms and documentation, it does allow them to deduct their total expense, so long as it doesn’t exceed their gross income. So what can condo managers do to help residents seeking to claim detailed deductions?
Allocating Space Usage
Residents will need to determine how much space of their home is dedicated to working, as well as make adjustments for areas that have shared use. They can prorate certain home-related expenses by calculating the area of their workspace as a percentage of their home size.
For shared spaces, like a kitchen table, they need to adjust their deductions based on how many hours they use the space for work each day.
The CRA offers detailed guidelines for how to calculate the size of your workspace, and you can share this information with your residents to help them with their deductions. Condo managers can offer their residents details from blueprints to help them calculate the size of their space.
In order to claim deductions using the detailed method, residents will need receipts for all the expenses they itemize on their returns. Condo managers can provide residents documentation for some of their deductible expenses, including:
- Utilities (electricity, heat, and water), or the utility portion of condominium fees.
- Home internet access fees, if the condo provides it.
- Maintenance and minor repair costs for expenses that affect the workspace (i.e., HVAC systems).
- Rent is deductible, but principal mortgage payments and interest fees don’t qualify unless you’re self-employed.
- Condominium Insurance is only an eligible deduction for self-employed residents.
Expenses for major renovations to extend the useful life of a property or improve it beyond its original condition don’t qualify for deductions. For example, the expense of a new HVAC system or updates to the interior are ineligible.
Residents will need to keep their documentation for up to six years after filing a claim. Condo managers can offer to help keep track of this information by keeping detailed files for all their residents.
World-Class Property Management for Condominiums
Ultimately, filing income taxes is the responsibility of your residents. Condo managers can help their residents with the documentation they request, but they should be wary of offering any tax advice without any background knowledge.
A good condo manager is there to serve the residents with any help they need. You should take the time to familiarize yourself with the tax procedure so you can provide information promptly and keep the condo community happy. Hiring a property management firm can help you facilitate all your residents’ needs and provide guidance for tax-related questions.
ICC Property Management offers condominium management services to help the condo board, managers, and residents alike deal with all the day-to-day issues of managing your property. We can help you keep track of your accounting and financial information, so it’s easy to share with your residents, as well as keep your condo communities up-to-date on the latest happenings.
Our team draws from nearly 30 years of experience as the premier property management firm in the Greater Toronto Area. Partner with us today and get the help you need to provide stellar service to your residents 24/7.