Setting up a home office is exciting, but it can also be costly. Luckily, there are ways to save money on furniture for your home office through home office tax deduction. For all its challenges, SARS does offer a comprehensive list of tax-deductible solutions for not only businesses but also for freelancers, sole proprietors, and people who are simply working from home. Outside of the COVID-19 pandemic, our changing lifestyle and new work habits, there is a growing demand for work at home office solutions and of course, tax-deductible equipment and furniture. The good thing is, with a little bit of research and admin, it is possible to save money on furniture for your home office.
Is Home Office Furniture Tax Deductible?
That’s the question, isn’t it? In short, yes, home office furniture is tax-deductible. There is a fair list of terms and conditions but you can start eyeing out a suitably professional home office furniture set up and start discussing it with your tax consultant. The rules are different for freelancers or sole proprietors as opposed to employees who have been given the go-ahead from their employers to work at home, but with the right information at hand it is possible and that ergonomic chair and desk which you so desperately need are on the horizon.
Who Qualifies for Tax Deductible Home Office Furniture?
The ins and outs of home office tax deductions are extensive, and you would be surprised just how many items can be claimed for. While it is true that getting your tax submitted is not the easiest of tasks, the benefits outweigh the effort of getting your paperwork together and dealing with your tax consultant – if you have one. Here is what we know though and this is a good place to start if the world of tax deductibles is new to you.
Freelancers and sole proprietors – taxpayers of this nature automatically qualify for home office tax deductions without having to work through the strict rules that apply to employees.
Full-time employees – for clarity SARS has combined full-time employees as:
Taxpayers who earn over 50% of their salary from variables such as commission or performance-based bonuses
Taxpayers who are working from home for more than 50% of their work hours
What Criteria Do Full-Time Employees Have to Meet?
In the instance of full-time employees, there are a variety of essential criteria to be met in order to qualify for home office tax deductions:
- The taxpayer must occupy an area of the home which is dedicated entirely to their work and nothing else, a dining room or other common area will not suffice.
- This area or home office must be equipped with the tools of their trade specifically used to perform their work.
- The employer of the taxpayer must give the taxpayer permission to work at home. This can be done through an official letter from human resources.
- You must have been working from home for at least six months.
- You will need to file your taxes at the opening of tax season taking care to fill in the details of your deductions under the ‘Other Deductions’ section of the ITR12 form, answering related questions and including proof of your claims.
- Don’t try to deduct expenses which will be listed in your tax return as capital expenditure, these items will not qualify for tax deductions.
What Can I Claim Tax Back On?
Under the relevant tax deduction section of your tax return, you will list your office furniture under wear-and-tear, and it is important that this furniture is specific to your home office and different to home furniture. For example, to want to buy items such as ergonomic, hardwearing desks and chairs sold by office furniture outlets.
Other items which can be claimed are:
- Rent or the interest on your bond
- Repairs and maintenance to your office space
- Electricity for your office space
- Telephone and internet expenses for your office space
- Office equipment such as computers and printers
- Rates and taxes
- Cleaning equipment and services
What if I Don’t Qualify For Home Office Tax Deductions?
If you are stuck in a situation in which you do not qualify for home office tax deduction, there might be a way to work around the situation. Here are some other ideas on how you can save money on furniture for your home office. It is worth the effort as ultimately the right home office furniture will positively affect your productivity.
Beg – there may already be a program in place in your office whereby your employer is able to give you an allowance for your home office furniture. It doesn’t hurt to ask, and it certainly won’t hurt as much as your back will if you don’t have a good office chair. Their own tax advisors may well have a plan in place for such necessities.
Borrow – not every company is able to just give all of its employees a furniture allowance, but that doesn’t stop you from borrowing a desk and a chair to use at home. Your employer may allow you to use spare furniture which you will have to take responsibility for. It may not be the most convenient option but if they do have empty desks and chairs, it is a good solution.
Once you have made sure you meet the criteria for tax-deductible home office furniture and you have chatted to your tax consultant for good measure, you can get shopping.
You want to take the following things into account before you start spending though:
- Is this home office furniture hardwearing?
- Is it ergonomic?
- Is there a warranty on it?
- Is the supplier established and trustworthy?
Hopefully, this article was illuminating, and you are not daunted by the cost of setting up your home office. If you need any additional advice about saving money on furniture for your home office and getting set up, get in touch with us now.