Things You'll Need
Making cuts is one of the most time-consuming parts of any tile installation. Unless you get lucky, you will have cuts at the ceiling across the entire expanse of the wall. Two main factors affect finishing the tile at the ceiling. One is the size of the cut and the other is whether the ceiling is level. The size of the cut can be planned for and the level of the ceiling is out of your control, but still should be factored in.
Lay out the tile installation before beginning to determine how the tiles will be finished at the ceiling. To do this, measure the height of the wall and divide it by the width of the tile plus one grout joint, using a measuring tape. This will tell you how large your cut at the ceiling should be. If you end up with a small cut, start with a half tile at the bottom. You don't want a 1/2-inch cut running around the ceiling. Also, if the ceiling is not level, a larger cut will help hide this.
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Cut the tiles that finish against the ceiling about 1/8 inch smaller than the size of the hole you are filling. This will allow for slight variations in the ceiling. Grout and caulk will cover this joint. Set the cut tiles, using the same adhesive you used for the rest of the wall. The cut edge must be against the ceiling and not the other tiles.
Apply grout to the joint between the tile and the ceiling. Even though you are going to caulk over it, this will add strength and stability. Wash all grout from the ceiling. Allow the grout to dry as normal.
Apply silicone caulk with the caulk gun, covering the grout joint. Use a wet finger to smooth the caulk joint where necessary. You want the caulk to adhere to both the tile and the ceiling and cover the grout. This will give a flexible joint to allow for movement between the ceiling and the wall.
If you get lucky on the initial layout and you have whole tile against the ceiling, the ceiling must be perfectly level or you will create a mess. If not, use the half tile at the bottom scenario described in Step 1.