Working From Home? The Ins and Outs of Home Office Tax Deductions

Working From Home? The Ins and Outs of Home Office Tax Deductions

home office tax deductions

Many employees are working from home due to the COVID-19 pandemic.

While SARS has yet to confirm this, it’s anticipated that anyone working from home for six months or more may be able to claim home office expenses.

These expenses can be claimed against income tax in the “Other Deductions” section of your tax return, ITR12.

So we all need to understand the ins and outs of home office tax deductions.

Who can claim home office expenses?

You’re entitled to deduct home office expenses if:

  • you’re allowed by your employer to work from home
  • you spend more than half (50%) of your total working hours working from your home office
  • you have a dedicated work area/office in your home that’s used exclusively for this purpose – the dining-room table isn’t acceptable
  • the office is equipped with the relevant tools of your work.

WFH during lockdown: can you claim?

It’s not yet clear what SARS will allow in the context of this year’s lockdown period.

That said, it’s likely that the same rules and requirements as usual will apply.

Say you started working from home on March 26, when lockdown began.

This indicates you must continue working from home until September 26, or for six months of the year, to qualify.

What home office expenses you can claim

Typically, home office expenses include costs relating to the premises/home office:

  • rent
  • interest on bond
  • cost of repairs
  • other expenses in connection with the premises.

In addition, expenses may include:

  • phone bills
  • internet expenses
  • stationery
  • rates and taxes
  • cleaning
  • office equipment
  • wear and tear.

How is a claim calculated?

A claim is calculated based on whether you’re a salaried employee or a commission earner with more than 50% of your total remuneration coming from commission or some variable that’s based on your performance.

If you’re a commission earner, you can claim all expenses relating to your house as well as other commission-related expenses, such as telephone, stationery and repairs to printers.

If you’re a salaried employee, you can only claim the deductions relating to your house.

An example home office expenses calculation

Here’s how to calculate the deductions if, hypothetically, you’re a salaried marketing executive who has a dedicated home office where you will work for more than six months this year.

  1. Work out the area of your home office in relation to the area of the house. For example, if your office measures 20 square metres and your home is 200 square metres, the home office represents 10% of the entire home.
  2. During the year, you incur the following expenses:
  • R150,000 interest on your bond
  • R40,000 rates and electricity
  • R45,000 paid to cleaner
  • R10,000 damp repairs.
  1. Your home office calculation is…

10% x (150,000 + 40,000 + 45,000 + 10,000) = R24,500

  1. The deduction is R24,500.

What we offer at Pawn My Car

Many South Africans are facing unforeseen expenses, from medical expenses to costs associated with working from home.

At Pawn My Car, we don’t offer expert tax advice – for that, please contact a professional. However, we may be able to help if you need funds quickly.

One fast, easy option is to secure a loan against a vehicle.

With Pawn My Car, you can use a fully paid-up car, bakkie, truck or boat that’s in your name to secure a loan, with no delays or laborious paperwork.

For more information, contact us on 086 172 9648 or simply complete and submit our online application form.

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