Tax home office deduction-GWM Chartered Accountants

Tax home office deduction-GWM Chartered Accountants

Tax Home Office deduction
Date: 24 June 2021
Written by: Wilna Meyer

The Covid-19 pandemic has seen n lot of people suddenly working from home. This means that some taxpayers may qualify for a home office expense deduction when they submit their 2021 tax returns.

Who qualifies for the home office expense deduction?

You qualify for the deduction if you:
Occupy a part of your home specifically for purposes of trade (which included employment)

and

The employee must regularly and exclusively use the office for business purposes ie:

  • It must be a separate space
  • Use solely as an office and equipped as such, not used by any other member of the family or for any private purposes (ie guest room)
  • The employee's duties must be performed more than 50% of the time in their home office for the year
  • The employer must allow the employee to work from home. Confirmation thereof will be a requirement on audit  

What can you deduct?

You can deduct the percentage of the area occupied as office divided by the total area of the home of the following expenses:

  • rent of the premises or interest of a bond
  • cost of repairs to the premises
  • Cleaning
  • Rates and taxes

In addition to these expenses, other typical expenses you may claim that is not part of home office apportionment:

  • Wear-and-tear allowance of Office equipment

What are the consequences?

It is important to understand that when a taxpayer claims home office expenses in terms of their primary residence, the capital gains tax exemption that applies when the residence is sold falls away in respect of the gain attributable to the portion of the residence uses as a home office for the period it was used for business purposes.

It is important that you discuss the benefits and risks with your tax practitioner before submitting your tax return.

Contact us if you need any assistance with your tax return submission