RENTAL expense of business if working from home!!!!!!

[Ice]

I know that you have to apportion the floor space and work out the percentage of Rent payable by the Company but I have two questions in this regard:

1) If most of your house is paid off and your bond is small - can you only claim a percentage of the bond repayment?
2) If your house is paid off entirely - can you allocate a reasonable Rent charge?

In my mind if I had an outside business renting space from me in my home that is fully paid for - surely I would have to base my charge to them on some reasonable figure?

[Dave A]

I think what you need to bear in mind here is that you (as the property owner) could charge the company (as the tenant) rent for the portion of your home that they are using. This would be income that is taxable in your hands and tax deductible expenditure in the hands of the company. And yes, the rent can be market related.

But this issue of calculating the quantum of the rent must be seperated from the issue of claiming tax deductible expenditure incurred in the generation of income in your hands.

Let's say the company is paying rent of R10 000.00 all found. What are the sorts of things you can claim as deductible expenditure incurred in the generation of that income?

Essentially the company's share of:
Electricity and water.
Rates.
Maintenance costs (which is something different from capital improvement costs).
Interest on finance (note - not the instalments, just the interest).

Let's say for simplicity their share of these expenses totals R6 000.00 - this would leave R4 000.00 as taxable income in your hands.

All the "allowable deductions" rule does is short-cut this calculation - because whether you're getting that R4 000.00 in rental "profit" or getting it as a salary makes no difference from a tax liability point of view!

Does that help any?