Navigating Home Office Expenses at Tax Time

Your home office may help you claim several expenses on your taxes. If you work from a home office, there are several deductions that you might be missing out on when you lodge your taxes. If you had a licensed tax professional like EtaxPlus assist you with lodging your return, you'd never miss out on a deduction again. It is complicated enough to lodge your yearly taxes correctly, but if you add a home office, it adds another layer that can be tricky to navigate on your own.


Home Office Expenses


Working from home is becoming more and more popular with sole traders and office staff alike. It offers a convenience that going into your work place doesn't have, and it allows you to have more time to work on your projects. Since your primary base for your work is at your home, this allows you to claim several different expenses. These can work to save you money once tax season comes around again, but they can also add another complex layer to your taxes.

  • Motor Vehicle Expenses. There are also expenses you can claim for your motor vehicle. You will have to prove these expenses by keeping your receipts or keeping a driving log. If you use your vehicle for work related trips, or if you drive from your home office to another location for business, you can claim these expenses.
  • Occupancy Expenses. If you are a sole trader and you work out of your home, you may be able to claim occupancy expenses when you lodge your annual taxes. These expenses are things you pay to stay in your home. They include mortgages or rent, home insurance premiums, any council rates you pay, and land taxes. This can all add up quickly. You want to make sure you properly document everything so you have proof when you file your taxes.
  • Running Expenses. The second category the ATO uses for home office expenses is running expenses. Running expenses are all of the miscellaneous things you pay each month to keep your home and home office habitable. These expenses include gas and electricity, your phone bill, and any cleaning expenses you may incur. Also, you can claim a deduction for both the decline in value of any furniture or the cost of furnishing repairs you did over the year, as well as a decline in value for your equipment and tools.


Capital Gains Taxes


There is a downside to using your home as a home office. The downside comes in the form of capital gains tax. The ATO may add capital gains taxes on to your annual tax return if you decide to sell your home. This tax will be added right on to your normal income tax for the year you sell your home. This is why it is critical to keep very thorough records of your property and the money you invest into increasing its value over the years. One of the professionals at EtaxPlus can be invaluable in assisting you with this endeavor. When you sell your home with your home office, you must record the timing for tax purposes. This means when you enter the contract and not when you close or settle. Tax time can be a confusing and stressful time and it can be even more confusing if you run a business out of your home. Our staff at EtaxPlus excels in many areas when it comes to taxes, and this includes home office expenses. If you're concerned that you may make a mistake, contact our office and set up an appointment to speak with one of our tax professionals. We will be more than happy to work with you and guide you through the process of lodging your taxes correctly this tax season.