With the costs of renting a premises so high, many people look at running their business from home. Running a part-time business from home is also becoming more popular.
When you run a business from home, you need to consider some tax implications of doing this. Examples of a home base business could include a chiropractor who has a consulting room at their home or a builder who has a workshop at their home.
You may be able to claim some tax deductions from running a business from home such as:
There is a sting in the tail when you are able to claim occupancy costs of a house. This would be in the form of capital gains tax if you ever sold the house. While people often think selling your house is exempt from capital gains tax, if the house has an area set aside exclusively for your business, there likely will only be a partial exemption from capital gains tax.
To work out the capital gain, you will need to consider factors such as the floor area of the house used for business purposes and the length of time the business was operated from the house.