Home office vs rental expenses when you live in one unit of your duplex in Quebec

Many duplex owners in Quebec live in one unit and rent the other. Some also run a small business or work from home. Things quickly get complicated: which costs belong to your home office, which are rental expenses, and which are purely personal?

This guide helps you structure your thinking and records so you are better prepared if Revenu Quebec or the CRA ever ask questions.

1. Three separate expense buckets

In a duplex or triplex that you partly occupy, you usually have three types of expenses:

1. Pure rental expenses (for the rented unit and common areas used for rental).
2. Home office expenses (if you are self-employed or an employee with eligible home office expenses).
3. Purely personal expenses (not deductible).

The goal is to avoid mixing these buckets, especially when invoices cover the whole building (municipal taxes, heating, internet, etc.).

2. Measuring space and usage

A good starting point is to calculate:

• The total square footage of the unit you occupy.
• The square footage used as a home office (closed room or clearly defined area).
• The portion used by the rental units.

Numeric example

• Duplex with two 5-room units of 1,000 sq. ft. each.
• You live on the ground floor (1,000 sq. ft.) and rent the upper unit (1,000 sq. ft.).
• Your home office is a 120 sq. ft. room.

You can then estimate:

• Rental portion (rented unit): 50% of the building.
• Personal portion: 50% of the building.
• Home office: 120 / 1,000 = 12% of the unit you occupy (and therefore 12% of the half you live in).

3. Allocating key expense categories

Municipal and school taxes, building insurance

These costs relate to the entire building:

• 50% belongs to the rental activity (the unit you rent).
• On the portion you occupy, part may be eligible as home office if you are self-employed or an eligible employee.

Utilities (heat, electricity, internet)

• If there are separate meters, use the actual amounts by unit.
• Otherwise, apply allocation keys (square footage, number of rooms, actual use) and document them.

Repairs and maintenance

• Repairs in the rented unit: generally 100% rental expense.
• Repairs in your own unit: often personal, unless they directly concern the home office area.
• Major work on the whole building (roof, windows): usually capital expenses, to be split between personal and rental portions (see the article Current vs capital expenses for a rental property in Quebec).

4. Home office: basic rules

For self-employed workers, Revenu Quebec and the CRA usually allow you to deduct part of home expenses if:

• The office is your main place of business, or
• You regularly meet clients there.

Eligible expenses often include:

• Heat and electricity.
• Property taxes and mortgage interest.
• Home insurance.
• Maintenance (cleaning, small repairs).

The most common allocation method is the area of the office divided by the total area of the home, adjusted if needed for the time the office is used for business.

Employees must meet stricter conditions and often need a T2200/RL-1 from their employer. Check the latest Revenu Quebec and CRA rules if you are an employee.

5. Avoiding double deductions

If you both:

• Deduct rental expenses on T776/TP-128-V, and
• Deduct home office expenses on T2125/TP-80,

you must be careful not to deduct the same expense twice.

For example:

• Municipal taxes on the building should first be split between rental and personal portions.
• Only the office portion of the personal half might then be claimed as a home office expense.

Document your logic (tables, notes) in case Revenu Quebec or the CRA ask for clarification.

6. Record-keeping practices that help in audits

To stay organized:

• Keep separate folders for rental and business.
• For each year, keep:
  • Tax bills, insurance policies, and utility statements.
  • Invoices for repairs and major work.
  • A simple sheet summarizing your allocation percentages (rental vs personal, then office vs personal in your unit).

If you change the layout (for example, converting a bedroom into an office) or the occupancy of units, update your percentages and keep notes.

7. When to get professional advice

Consider consulting a tax professional when:

• You have done major work on the building (roof, windows, full kitchen or bathroom).
• The home office takes up a large portion of your unit.
• Your rental and business income are significant compared with employment income.

A professional can help you:

• Choose reasonable allocation keys.
• Classify work as current vs capital.
• Coordinate rental and business deductions so you use them fully without double-counting.

Call to action

If you live in one unit of your duplex or triplex in Quebec and use part of it as a home office, TaxCove can help you structure your records and allocations for both rental and business activities. To get started, visit the secure tax intake form page.

Important notice

This article provides general information only and does not replace personalized tax advice. Tax rules and administrative practices can change. Always check the latest details from Revenu Quebec and the CRA or consult a qualified professional before filing your returns.