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Working From Home Due to COVID-19?: You Might Qualify for Home Office Tax Deductions

Working From Home Due to COVID-19?: You Might Qualify for Home Office Tax Deductions
June 12, 2020 gnuworld
work from home tax deductions

If you work from home, you might qualify for some significant home office tax deductions. That includes deductions for office furniture, as well as other home office costs.

Conditions for claiming home office expenses

To claim home office expenses, you must have a dedicated office space at home.

If you’re making do by working at a dining room table, for instance, you won’t qualify.

You also have to keep proper records. You’ll need invoices so you can substantiate your claims if you’re audited.

The following, additional conditions apply if you’re a full-time employee:

  • the employer expressly allows you to work from home
  • you spend more than half your total working hours working from home
  • the office is equipped based on your specific work responsibilities.

These conditions don’t apply to those who are self-employed, like freelancers or sole proprietors.

Claiming WFH expenses due to COVID-19

To claim home office expenses, you have to spend at least half your work time – or half the year – working from home.

The COVID-19 outbreak may have forced you to start working from home towards the end of March.

That means you probably have to continue working from home until the end of September to qualify.

What home office expenses you can claim

Home office expenses include costs that can be deducted in full.

They also include office running costs. These have to be calculated as a proportion of household running costs.

Types of expenses that can be deducted in full

Home office expenses you may be able to claim against tax include:

  • home office equipment
  • depreciation of equipment
  • *work-related phone costs
  • *stationery
  • work-related internet and data
  • cleaning expenses (provided they’re only for your office)
  • home office repairs and maintenance.

* Certain limitations apply. For example, salaried employees can’t claim phone and stationery expenses.

You can claim these expenses if you’re self-employed. You can also claim them if you earn more than 50% of your salary through commission or based on work performance variables.

Office running expenses

Based on the size of your home office relative to the rest of your home, you can claim a portion of the following expenses:

  • electricity
  • rates
  • rental, if applicable
  • interest on bond payments, if applicable.

Say your home measures 200 m2 and your office is 40 m2. This means that your home office takes up 20% of your home.

You calculate this as 40 divided by 200. Then multiply by 100 to make it a percentage.

So in this example, you can claim 20% of your utilities bills and 20% of any rental or bond payments.

Example claim for home office expenses

Marcus works from home as an architect. His employer has supplied a letter expressly allowing him to do this.

In his home, he has a separate office that he uses exclusively for work purposes. The office takes up 15% (or 0.15) of his home’s total floor space.

Marcus can deduct the full amount of certain expenses, such as the costs of:

  • a printer
  • a new office chair
  • materials and labour required to paint the office
  • weekly cleaning of the office.

Because Marcus isn’t self-employed (he’s a salaried employee), he can’t deduct phone and stationery costs from his taxable income.

In addition, Marcus can deduct 15% of his utilities bills (rates and electricity) and rent or bond payments.

Say Marcus pays R18,000 in rates and R8400 in electricity during the tax year.

His office running costs would be calculated like this:

[office space over total floor space] x [total running costs per annum]
= 0.15 x (18,000 + 8,400)
= 0.15 x R26,400
= R3,960

Getting a new office chair

If you work from home, a comfortable and supportive office chair is a must-have item.

Don’t end up with neck, shoulder and back problems by working on a bed, sofa or unsuitable chair!

K-Mark offers an extensive range of high-quality office chairs and soft office seating – and a new chair can go towards your home office tax deductions! Browse our full range online or contact us to find out more.