Key Takeaways
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You can potentially claim a tax deduction for a home office if the space is a dedicated room that is equipped, used regularly, and exclusively for work.
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If you earn a salary, it’s possible that you can only claim the proportional costs of the physical workspace.
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If you earn commission, theoretically, there is a wider range of SARS-verified business expenses you could potentially claim.
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Before you submit your tax return, it’s critical to weigh the short-term tax benefit against the possibility of capital-gains tax when you sell your home. When in doubt, consult a registered tax practitioner.
Doing one’s taxes is a necessary evil, and with the cost of living constantly increasing, everyone is looking for ways to either cut costs or save that little bit extra. If you work from home, carefully monitoring both your expenses and what is and is not tax-deductible is doing both.
Working from home does not, in itself, qualify for a home-office tax deduction: your space – office – needs to be dedicated to, and equipped for, your work, which must generate you an income.
In this article, we’ll look at a few work-from-home scenarios and what may or may not qualify for tax deductions.
Do you earn a salary or commission?
If you have a home office, how you earn your money will influence what qualifies as a deduction.
If you earn a salary, you can potentially claim expenses that are directly related to your exclusive home office. If you use it regularly and it is specifically equipped and exclusively used for work, an employee may claim a proportional share of household costs such as rent, rates and taxes, electricity, cleaning, security costs, homeowner’s insurance, wear and tear on equipment used for your work, as well as repairs that relate directly to that home office.
Notice how all these deductions usually relate to the physical space in which you work: the amount for a potential deduction is calculated in proportion to the amount of space that qualifies as an office.
Commission-based earners, however, could qualify for a broader range of deductions because their income is linked directly to sales or output rather than a fixed salary alone. In addition to qualifying home-office costs, they may potentially deduct work-related expenses such as their cellphone and internet bills, stationery, computer or equipment costs, as well as work-related travel, as long as they can prove that all these expenses are incurred in the course of earning commission.
Bear in mind that:
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the home-office requirements still apply, and these additional tax deductions are not automatic
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if you do not have a logbook for your car, or proof of other business travel, you will not be able to claim these expenses as deductions
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with effect from 2023, interest on a home loan is not generally deductible as a home-office expense
What does it take to qualify for home office tax deductions?
In this section, we look at several work-from-home scenarios as well as whether and what might (or not) qualify as tax deductions.
The more-than-50% working-time requirement
If you only go into the office twice a week and work the rest of the time in a separate, dedicated home office, you may qualify for a home-office tax deduction. However, the room must be properly equipped and used both regularly and exclusively for work. In other words, a space is more likely to meet SARS home office requirements if it is furnished with a desk, chair, laptop and printer, and if you do not use it for personal or family activities.
In this scenario, as a salaried employee, spending 60% of your work time in your home office, you would probably meet the SARS more-than-50% working-time requirement.
Working in a shared space
If you work in a shared space, it does not matter how often you use it; what matters is that it has other uses: it could be the dining room, guest room or kitchen. These spaces are unlikely to qualify as a home office because —
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You, your family and/or guests will use the dining room, guest room and/or kitchen for private or household purposes — in addition to your using it for work.
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The fact that you work in the space regularly does not override the fact that SARS demands that the space must be used exclusively for work.
Tenants versus homeowners
Regardless of whether you rent or own your home, you may potentially qualify for a home-office deduction if your workspace meets the usual SARS requirements. There are, however, some differences: a tenant may potentially claim the portion of rent that relates to the home office, while an owner may also be able to claim certain allowable running costs linked to the office.
Then again, property owners do need to be aware that not all the costs associated with owning a property will apply, and that any and all tax claims must be supported with proper records.
What if I mainly earn commission?
Someone, like an estate agent who earns more than 50% of their total income from commission, may be treated differently from an ordinary salaried employee. For example, if they spend most of their working time outside of the estate agency’s premises showing properties, having client meetings and working from their dedicated home offices, they may potentially qualify for a broader range of work-related deductions such as:
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cellphone expenses
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stationery
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office equipment
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qualifying portions of rates and taxes or other permissible home-office costs
The fact that someone works as an estate agent, or earns commission, does not automatically mean that every expense will qualify. Each expense must still be directly connected to earning commission income and supported by proper evidence.
What if I share an office with my spouse?
If you share a home office with your spouse or partner, and if each person has a clearly defined workspace, the room may still potentially qualify for a tax deduction. Both of you should have your own desk, equipment and an allocated space used only for your work. For your individual tax claims, each of you must be able to show that:
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your own section is specifically equipped for your work
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your section is used regularly and exclusively for work
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you meet the working-time requirements that apply to them
Word to the wise: Sharing a room does not automatically disqualify you from claiming, but each workspace must be clearly separated, properly equipped and used exclusively by that person for work. Again, each person must keep records to support their claim.
What if I need to do repairs or improvements to my home office?
Before you can answer this question, make sure that the room meets the SARS requirements for a home office. If it does, repairing a broken window, damaged fitting or replacing a worn-out feature could qualify as a home-office expense.
What is the difference between a repair and an improvement?
A repair generally means fixing a broken or worn-out item to try and return it to its original condition. On the other hand, an improvement either upgrades, extends or enhances the property beyond its original condition.
While it’s possible that you could claim repair costs that relate to your home office, improvements cannot be treated in the same way: you will need to keep all the invoices and relevant records of what work was done, and why it was necessary for your workspace.
Word to the wise: Keep it all above board by being honest. Make sure your accounts are in order and to check with your accountant or tax practitioner.
What happens if I sell a home with an office?
If you decide to sell your home and have both set up and claimed for a dedicated office or workspace, this could have tax implications beyond your annual home-office deduction. On one hand, it could be impacted by whether the property has been rezoned. On the other hand, past claims relating to the business-use section of the property could result in that portion of the sale being subject to capital-gains-tax.
A last word
The regulations governing this have changed quite a lot since the advent of remote work during COVID, and SARS updates them every year. Before you claim tax deduction on your home office, consult a registered tax practitioner to be sure that you understand the potential short- and long-term knock-on effects.
If you are looking for a home with a private office or workspace, speak to your nearest REMAX agent about properties that offer a practical, dedicated area for working from home.
Have more unanswered questions? Here are some related questions – and answers – that might help…
How do I calculate the proportion of my home that could potentially qualify as a home office expense?
To work out the property apportionment percentage of your home, you measure the size of your office or workspace. Divide this number by the size of your house. This percentage is the floor-area apportionment that you can use as the basis to claim for your tax deduction. The formula is below:
Home-office percentage = m² of office
m² of home
