There is no doubt that the working environment is going to change after COVID-19. Open plan offices might well be a thing of the past for many corporates. Working from home can have its benefits such as not spending 4 hours in traffic every day. There are also certain tax deductions available if criteria are met.

SARS Requirements 

  1. The home office must be exclusively used (Can’t be shared space, such as a nursery or spare room with a bed. Must be specifically designated as office area)
  2. Specifically equipped (Furnished as home office. Computer, Desk, chair, files, etc.)
  3. This should be the space where you mainly perform your business activities (more than 50% of your work)

 What costs are deductible? 

  1. Annual Home Loan Interest / Rental paid
  2. Rates, electricity, water, gas
  3. Cleaning service
  4. Security
  5. Repairs and Maintenance, not improvements

Cost are apportioned based on SQM of the home vs the office.

Negatives

Keep in mind that if you own the property, this deduction may attract a capital gains consequence when you sell. Although not massive there is an impact as you are using your home for the purposes of trade. For those renting this would not impact you as the property is already been used for trade by your landlord.

Example

A homeowner with a 250 Square meter home of which 20 Square meter study is used as a home office will have a home office deduction as follows: 

Rent Paid       132 000 
Electricity         13 650 
ADT           2 988 
Cleaning         42 000 
Painting of house (repairs)         45 000 
   
Total Expenses    235 638
Home Office Deduction: R235 638 / 250 * 2018 851
Tax Saving for most individuals4 336
   

Pro-Tip:

You need a letter from your employer stating that you are required to work from home.

Categories: Tax