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With the rapid change many businesses made to their working environments, shifting their employees to work from home, individual taxpayers are increasingly seeking clarification on income tax breaks for home office costs. 

The short and sweet answer to this question is yes, salaried employees who are now working from home can claim an income tax deduction for home office costs. The details surrounding what allows these individuals to qualify, varies to those of contracted workers and freelancers.

income tax
Salaried individuals are required to have a specified and well-equipped space that can be regarded as their home office. Furthermore, they are required to have explicit permission from their employer to work from home, spend the majority of their workday in this space, and only use this space for work purposes. These qualifying salaried employees will also be limited to the following expenses:
  • Premises rental
  • Bond interest
  • Rates and taxes
  • Phones
  • Stationary
  • Office equipment
  • Cleaning
  • Premises repairs
  • General wear and tear on office equipment

Costs such as internet, water and electricity, security and insurance may also be considered.

How to calculate this deduction

To calculate this deduction individuals are required to determine the area of the home office as a percentage of their entire property. This percentage then needs to be applied to the total expenditure of the home.

Other allowable deductions, such as stationary, needs to then be added to this total. This estimate must be made available to SARS, along with any relevant documentation, such as municipal bills, rental agreements, etc and should be claimed within the individual’s annual tax return as home office expenditure under “Other deductions”.

Capital Gains Tax Considerations

When individuals choose to declare a part of their home for trade purposes to SARS, they should be aware of the possible Capital Gains Tax implications. If individuals choose to one day sell their property, they may be vulnerable to a capital gains event, where the part of the home used for trade purposes is considered tainted.

The MMS Group is a leader in taxation compliance services.  Should you require support in determining your work from home income tax deduction, feel free to reach out to us here.