Home Office Tax Relief

A home office deduction is well worth considering if you work, or run your business, from home. Depending on your local tax law, you could be eligible for some tax relief.

What this means is that if you able to qualify for this tax relief, you can reduce your tax bill accordingly and retain more of your business profits. Of course, because the Inland Revenue is very strict about who qualifies for a home office deduction, it's important to make sure that you meet the qualifying criteria.

IMPORTANT: The information in this article applies generally, but the rules in each country may vary. Be sure to check the website of your local tax office for more information

The business expenses that you claim for should be carefully reviewed and calculated so that the Inland Revenue perceives them as normal and not outside the realm of reason. Claiming too much in this area could result in a visit from the tax man and probably a time-consuming audit.

To be eligible for a home office deduction you must have a designated room or area in your home that is used specifically for your business, on a regular basis. Your main business dealings should be done in that room or area including client meetings and administration.

When you calculate your tax bill, you should be able to reduce it by an amount that represents the electricity you used to operate your business. The rule of thumb to calculate the portion of electricity that goes to the business each month is to divide the total amount by the number of rooms in your home.

Another method of calculation is to measure the square footage of your home and office and deduct the office size from the main house, in order to gauge correct percentage rates of payment.

It's possible that you could even be able to claim back some of your mortgage payments. The best way to go about this is to hire an accountant, someone who can work out the exact logical amount.

Additionally, business expenses can include repairs, maintenance and water bills. Save your bills and keep an accurate record of your weekly operating costs so that, when the time comes, it's not that difficult to settle on a number to reclaim. Some expenses are not eligible, so be sure to take note of what you can and cannot claim back.

A home office deduction could make the difference between your business going under, or surviving for another year. If you are operating a legitmate home business, you should definitely look into claiming back some of your expenses. Whether you are a home business owner working as a self-employed individual, or simply working for an employer out of a home office, you should take the time to find out if you are eligible for tax relief or other benefits.


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