Claiming tax deduction for home office? Part 3

Whether you are self-employed or are an employee, you may be able to claim certain work related expense as deduction where the part of your home is used for income producing purpose and has the character of a place of business.

To claim such work related expenses, part of your home must be used regularly and exclusively as one of the following:

• The principal place of business for your trade or business;
• The place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business; or
• in connection with your business or income producing activities, but does not constitute a place of business

Today we are looking at claiming tax deductions when you work at home but do not have a home work area

This means that your principal place of business is not at home, nor do you have an area or room primarily or exclusively set aside, but you conduct some business activities at home. For example, you might work for a few hours in the lounge room.

You can claim deductions for:

• the cost of using a room’s utilities, such as gas and electricity
• business phone costs, and
• the decline in value of office plant and equipment (for example, desks, chairs and computers).

You cannot claim a tax deduction for the following:

• decline in value of curtains, carpets and light fittings, and
• the cost of owning or renting the house (such as, rent, mortgage interest, insurance and rates).

If you claim a tax deduction on your utilities, you will have to apportion these expenses and show how you arrived at the amount you claimed as a deduction. You cannot base your claim on a floor area basis as the area is also used for non-business purposes.

This article has been prepared for the purposes of general information and guidance only. It should not be used for specific advice or used for formulating decisions under any circumstances. If you would like specific advice about your own personal circumstances please contact our office.