Have I used the word "where" in the right place in the following sentence?
Life is where my heart is.
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Your sentence sounds strange to me. I think there are two reasons:
1) As @snailboat pointed out, there is a saying in English:
Home is where the heart is.
I think your sentence is too close to this saying, and it sounds like you misremembered the saying.
2) I'm not 100% sure what idea you're trying to convey. You could be trying to say any of the following:
My life is important to me.
What's important in my life are the things I love
I have dedicated myself to having a fulfilling/interesting/important life.