Home business expense claims can have Capital Gains Tax implications.

Typically many small businesses operate their business out of their home.

In this case, then you are entitled to claim expenses related to your home business.

What can I claim?

If you perform some or all of your business from your house, then you may be able to claim tax deductions for business expenses in the following categories:

  • occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums)
  • running expenses (such as electricity, phone, the decline in value of plant and equipment, furniture and furnishing repairs, cleaning)
  • the expenses of motor vehicle trip between your home and other locations, if the travel is for business purposes.

A home-based business is one where your home is also your principal place of business. That is, you run your business at or at your house. You should have a room or space set aside exclusively for business activities.

Good news is that when renting your house, then there are no cgt implications and % can be claimed.

Where you are operating as a Trust or a Company, you can’t directly claim the interest etc., on the house. However, you are entitled to charge your business rent for using your home.

Your claim is based on % of occupancy – make sure you do a mud map and work out the area allocated. Please don’t include your toilet or kitchen as the ATO considers this material and need it for private purposes.

Home business proportion the area

Your home will, however, be subject to CGT on the proportion of use and time.

Selling your home from which you have run your business will make it subject to capital gains tax on the percentage set aside for business multiplied by the period. However, as a small business, you will be able to claim the small business capital gains concession, which may considerably reduce or eliminate the gain.

Insurance and public liability are often overlooked. Adequate insurance should be considered when using your home as a place of business

Need help?

Happy to discuss your options with us and keep adequate documentation if the ATO ever decide to review your claim.

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