- If you have missed the live streaming, it’s now available to watch here.
- The presentation discussed during the webinar is also available here for viewing or downloading.
- The key questions asked during the webinar are published here.
When will I be able to claim home office expenses?
If you are an employee who works from home and have set aside a room to be occupied for the purpose of “trade”, you may be allowed to deduct certain expenses incurred in maintaining a home office, which will be calculated on a pro-rata basis: Provided that you meet the requirements as set out in the Income Tax Act, section 11(a) read in conjunction with sections 23(b) and 23(m). See below for more information on section 23 (b).
What are the requirements for claiming home office expenses?
Section 23(b) of the Income Tax Act states that a tax deduction for home office expenses will only be considered:
- If the room is regularly and exclusively used for the purposes of your trade, e.g. employment; and is specifically equipped for that purpose. The home office must therefore be set up solely for the purposes of your trade; and
- If your remuneration consists only of a salary and similar remuneration, your duties must be mainly performed in this part of the home. It therefore means you must perform more than 50% of your duties in your home office; or
- If more than 50% of your remuneration consists of commission or variable payments based on your work performance, more than 50% of those duties must be performed otherwise than in an office provided by your employer.
What constitutes home office expenditure?
Typically, the types of home office expenditure referred to in section 23(b), are those that are closely linked to the premises, namely:
- rent of the premises;
- cost of repairs to the premises; and
- expenses in connection with the premises, which could include:
- rates and taxes;
- cleaning costs; and
Other typical expenditure that may qualify for a separate deduction in respect of maintaining a home office, include:
- general wear and tear on items used for trade purposes in the office;
- office equipment, furniture and fittings, and repairs thereto;
Note that the two lists above do not reflect expenditure that is necessarily deductible. The lists reflect only the types of expenditure that may typically be incurred in relation to maintaining a home office.
How do I calculate home office expenses?
Generally, the expenditure relating to the rent of, the cost of repairs of and in connection with the premises, is determined on the basis of apportionment. There may be instances where a type of expenditure is not subject to this apportionment and is, for example, fully excluded or included (see further below). SARS accepts that the correct apportionment method to calculate the proportion of expenditure attributable to a part of a premises occupied for purposes of trade, is apportionment based on floor area of the premises (square meters of area of home office versus total square meters of your home).
What is the method of calculating home office expenses?
Should you qualify for a deduction in respect of home office expenses, the amount must be calculated on the following basis: A / B x total costs, where:
- A = the area in m² of the part specifically equipped and used regularly and exclusively for trade (namely, the qualifying home office)
- B = the total area in m² of the residence (including any outbuildings and the area used for trade in the residence)
- Total costs = the costs incurred that are linked closely to the premises (such as rent, rates and taxes, repairs, and electricity), excluding expenses of a capital nature.*
*Note that only expenses relating to the premises must be apportioned based on floor area (for example, rent, rates and taxes, cleaning, etc.). Expenses that are not in connection with the premises (such as wear and tear on equipment and furniture used for trade purposes) do not need to be apportioned based on floor area.
Where will I claim home office expenses on my Income Tax Return (ITR12)?
Should you qualify for a deduction in respect of a home office; enter the amount calculated next to the source code 4028 (Home Office Expenses) in the “Other Deduction” container on your Income Tax Return.
I want to complete the home office expenses but it does not reflect on the form wizard questionnaire?
When completing the form wizard on the Income Tax return (ITR12), answer the question “Did you incur any expenditure that you wish to claim as a deduction that was not addressed by the previous questions?” (Select ‘Y’ or ‘N’). If yes, the section for ‘Other Deductions’ will be added to the return.
What are the Capital Gains Tax implications if I sell my house used partially for trade?
When a part of your home is used as a home office, that part is considered to “taint” the primary residence exclusion for CGT purposes.
Upon the sale of the home, the overall capital gain or loss will need to be apportioned between the tainted and untainted elements. This apportionment is done by taking into consideration the portion of the home being used for business purposes as a home office (based on floor area) and the period that the part was used as a home office. The primary residence exclusion of R2 million can only be set-off against the untainted portion of the capital gain or loss. The tainted portion of the capital gain must be fully brought to account. For more detail, click here.
Frequently Asked Questions
How do I declare home office expenses?
Should you qualify for a deduction in respect of home...Read More
FAQ: I have incurred interest on my mortgage bond, in respect of my home. I use a part of my home as my home office, and meet all of the requirements to claim a home office deduction. Can I claim the mortgage interest?
It has been Revenue practice to allow mortgage interest in...Read More
FAQ: Can you get solar rebates for Work-From-Home (WFH) if your personal property is running on Solar and part of your property is dedicated to work from home?
If your property is running on your own installed solar...Read More
FAQ: Can I claim for installing desks and shelving as well as chairs etc. for the separate room I have converted into a home office?
Yes, you could qualify for a wear-and tear allowance on...Read More
FAQ: I decided to turn the garage which was filled with clutter into an office, I renovated the space (paint, ceiling installation with lights, window, office chair and desk etc.). I own outright and do not pay bond or rent, and also do not have records of floor plans. Am I eligible to make a claim?
You will need to obtain accurate dimensions for the converted...Read More
FAQ: What do I need to keep as proof for electricity, if am using Prepaid electricity for my home office expense claim?
The prepaid vouchers will be acceptable.Read More
FAQ: I have always worked from home but never claimed a home office expense deduction. I now know that I could qualify. What deduction can I claim in the current year of assessment for equipment that I purchased in earlier years of assessment?
You may qualify for a wear-and-tear allowance on the asset....Read More
FAQ: I have a room that I use for my home office but there is a wall of cupboards that is used for linen storage can I still claim for the home office but exclude the square meters of the cupboards?
Excluding the space for the cupboards will ensure that only...Read More
FAQ: I have a full time domestic helper who cleans my home office space daily and I pay her cash at the end of the month. What proof would you require in this instance?
Proof of payment must be retained. The domestic worker should...Read More
FAQ: A taxpayer and his or her spouse both require only a laptop to conduct their trade of employment. They share an office at home. The room is 100% an office and is used for nothing else. Does this fail the requirement of exclusive use? Should the house have two separate rooms that are used separately by each spouse for their work?
If the home office is clearly divided between the two...Read More
FAQ: If I have solar power during the day, how can I include this in my home office claim because I don’t have receipts for that power?
If no expense has been incurred, no deduction is permitted....Read More
FAQ: During verification of home office expenses by SARS, one of the items requested is evidence that duties are performed mainly in the dedicated office space. What would be accepted as supporting evidence for this question?
Signed confirmation letter from the employer with their employer registration...Read More
FAQ: What happens if I never had an office at home but now I have to sit at home and work due to COVID? Can I still claim home office expenses? Will these expenses be considered for COVID-19 in Year of assessment 2022?
You will not be eligible to claim home office expenses...Read More
FAQ: How will the use of one’s home office for 1 or 2 years impact the CGT calculation on disposal of that property?
When a part of your home is used as a...Read More
FAQ: Will the use of home office equipped for work purposes be allowed as a deduction for employees that have due to the pandemic been working from their home offices? Bearing in mind that in a normal period they would have worked from their employer’s offices.
Yes, provided they meet the legal requirements. An additional requirement...Read More
FAQ: Do I qualify for this tax deduction if I have renovated a room in my home for the sole purpose of my office space (can I claim for the renovation)?
This will depend on whether the renovation constitutes a repair...Read More
FAQ: Would insurance excess on the ceiling repair and geyser be allowed? If the geyser is directly above the home office space.
Such an insurance excess on the ceiling repair would be...Read More
FAQ: Can a salaried employee claim a deduction for home office expenses?
If a salaried employee meets the requirements prescribed by the...Read More
FAQ: When claiming home office expenses what exactly does the employer need in the letter to SARS that confirms the employee’s work from home arrangement
The letter from the employer should contain the following: The...Read More