Home – New Forums Money matters Rental home office claimable expenses

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  • #987326
    business808080
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    Hi,

    I want to rent a 2 bedroom apartment and utilise one room for a home office. Im trying to calculate approximately how much I will be able to claim using http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=Home_office.XR4&go=ok

    I went though the questionnaire using approximations and was somewhat surprised at how little I could claim.

    Assuming my rent was $350 a week and I spent about 6 hours a day in the office, my total expenses on rent alone would be $18,200 with my claimable expenses being only $2,071. Am I missing something? For some reason I expected the claimable expenses to be in vicinity of 1/3.

    #1162144
    Simply Money Honey
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    Hi

    I believe the ATO’s calculator calculates the cost of the rental deduction based on floor space eg. floor space of office/total floor space x annual rent assuming the office is 100% used for business purposes. You have to remember the kitchen, bathroom, living room, bedroom etc are all personal.

    Gabrielle

    #1162145
    business808080
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    Simply Money Honey, post: 187399 wrote:
    Hi

    I believe the ATO’s calculator calculates the cost of the rental deduction based on floor space eg. floor space of office/total floor space x annual rent assuming the office is 100% used for business purposes. You have to remember the kitchen, bathroom, living room, bedroom etc are all personal.

    Gabrielle

    One room would make up approximately 1/4 of an apartment, plus with additional claimable items, I figured the number would be close to 1/3. This site seems to support my claim:

    “You can generally claim the same percentage of occupancy expenses as the percentage area of your home that is used to make income, and again one common way to work this out is to use the floor area put aside for work as a proportion of the floor area of your home as a whole (as can be used for some running expenses, as mentioned above). So if for example your home office is 10% of the total area, then you may be able to claim 10% of rent costs or mortgage interest, council rates, insurance etc. In some situations it may be necessary to adopt a basis other than floor area, for example where say a huge workshop attached to the home may take up a great amount of floor space but contribute much less to the value of the overall property.”

    http://www.lewistaxation.com.au/business/business-deductions/tax-working-from-home

    #1162146
    Simply Money Honey
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    This sounds correct. What numbers did you put in the calculator for floor space? Maybe you need to do the calculator again.

    #1162147
    business808080
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    Simply Money Honey, post: 187403 wrote:
    This sounds correct. What numbers did you put in the calculator for floor space? Maybe you need to do the calculator again.

    Yes, I think i did it wrong. I will try it again :)

    #1162148
    business808080
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    I accidentally entered the weekly rental cost as opposed to the annual rental cost. The new result is roughly $8000 in claimables which is about what I expected

    #1162149
    business808080
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    Im just thinking that when companies put up their employees who have traveled to work in a new place, they pay for a place for them to stay. So if you are an entrepreneur who works 24/7 for a company (which happens to be your holding company under which your ventures launch) couldn’t that company potentially pay for the entire rent/utilities?

    #1162150
    Burgo
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    I discussed this with my accountant, who I havent paid in 30 years, he suggested a figure of $ 120.00 per week for my desk space. Interesting.

    #1162151
    Miss Bookkeeper
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    business808080, post: 187401 wrote:
    One room would make up approximately 1/4 of an apartment, plus with additional claimable items, I figured the number would be close to 1/3. This site seems to support my claim:

    “You can generally claim the same percentage of occupancy expenses as the percentage area of your home that is used to make income, and again one common way to work this out is to use the floor area put aside for work as a proportion of the floor area of your home as a whole (as can be used for some running expenses, as mentioned above). So if for example your home office is 10% of the total area, then you may be able to claim 10% of rent costs or mortgage interest, council rates, insurance etc. In some situations it may be necessary to adopt a basis other than floor area, for example where say a huge workshop attached to the home may take up a great amount of floor space but contribute much less to the value of the overall property.”

    http://www.lewistaxation.com.au/business/business-deductions/tax-working-from-home

    For you information – if you are running your business as a sole trader you may not be able to claim rent as a deduction.
    Deductions you can claim differ between sole traders and companies.
    If the PSI rule apples to your income, rent is not claimable.

    http://www.ato.gov.au/General/Contractors/In-detail/Personal-services-income/Personal-services-income-for-sole-traders/?page=17

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