Tips on claiming home office expenses

If you conduct whole or part of your employment-related activities at home, the good news is that in addition to the many advantages of working from home, there is another advantage that not many people are aware of.

Home office expenses can be claimed as deductions which can be claimed in your tax return lodgement. CPA Tax accountant Linda Chen provides some handy tips below:

Home Office Expenses That Can Be Claimed

Qualifying home office expenses are those that can be claimed. They include: heating, cooling and lighting expenses; computer consumables, stationery, telephone and internet expenses claimable on an actual expense basis; depreciation of home office furniture and fittings; and depreciation of office equipment and computer.

Home Office Expenses That Cannot Be Claimed

Non-qualifying home office expenses are those that cannot be claimed. Mortgage or interest costs, depreciation of the house, rates and taxes are examples of home office expenses that cannot be claimed.

How To Claim Qualifying Home Office Expenses

There are two methods that you can use to claim qualifying home office expenses as deductions while computing your tax payable. The two methods are the diary method also known as the actual running expenses method and the tax office rate per hour method.

The Diary Method/ Actual Running Expenses Method

Using this method, you will have to maintain a diary showing how much of your running expenses can be linked to your home office work. The diary should also show in detail the number of hours you spend in the home office compared to other users of the same office. Ideally, you should maintain diary records covering four-week periods.

The Tax Office Rate Per Hour Method

Using this method, you will have to use a fixed rate of 34 cents per hour for home expenses of cooling, heating, lighting and depreciation of furniture instead of keeping track of the actual costs. You will however be required to keep a record of the actual number of hours you spend at the home office and then multiply the hours by the fixed rate of 34 cents per hour.

It is recommended that you have a single room in your home set aside as the home office. You are however not mandated to have one. If you are using a room for more than one purpose for example using it as both the home office and the dining room or if you are sharing the room with others; you can only claim home office expenses for the number of hours that you had exclusive use of the area.

Source: Linda Chen.

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