Work From Home Tax Deductions

If you are an employee who works remotely more than 50% of your time and has designated a specific room for business purposes or you are self-employed and work from home, you might be eligible to deduct certain expenses associated with maintaining a home office.

These deductions would be calculated proportionally, based on the portion of your home used for work, as long as you meet the necessary criteria.

These criteria leave no aspect uncovered; it’s incredibly detailed. Here’s what you’ll need:

  • Premises needs to be either owned in your personal name or leased in your personal name.
  • A letter from your employer permitting remote work – including the period that remote work was allowed and where available dates that the employee did not report to the office.
  • Floor plan showing dedicated space and calculation of proportion in relation to total buildings on the property.
  • Photographs showing a dedicated space that is specifically equipped.
  • A detailed schedule showing a calculation that work was mainly from home – in other words, showing that more than 50% of all work for the year was from the home office, including any supporting evidence.
  • Actual invoices of claimed expenses with proof of payment, these must be in the name of the taxpayer:
    • Internet
    • Electricity
    • Interest for bond
    • Repairs and maintenance
    • Other costs
  • Schedule of amounts claimed and apportionment calculations.
  • Office equipment (like laptops and furniture) cannot be claimed as an expense.

However, as we are all aware, dealing with SARS is not without its challenges. Therefore, if you own the home, it is important to take into account the tax consequences before making any claims.

A home office expense claim will directly affect your primary residence capital gains exclusion you receive when selling your home. The exclusion is an amount of R2 million, and this amount will have to be apportioned between primary residence use and business use.

This apportionment must take into account two factors:

  1. The length of time that the home office was used as a portion of the entire period of ownership.
  2. The size of the home office compared to the size of the entire property.