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Do you know how Capital Gains Tax affects you if you work from home?

by , 08 August 2014
More and more employers and employees are opting to work from home. It saves on time, petrol and, let's be honest, it means you can get up 30 minutes later in the morning.

But all these wonderful benefits come with certain downfalls. You see, if you claim tax deductions on your home office, SARS will know this part of your home is a work space.

SARS sees this space as a capital asset and part of your business. And that only means one thing: Capital Gains Tax (CGT)!

Here's how CGT affects your home office...

 
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Here's how CGT affects your home office space 

 
SARS will work out the Capital Gains Tax on your home office by working out its value against the rest of the house. For example, if your house is worth R700 000 and is 90 square metres, SARS will start by dividing the value by the number of square meters.
 
This works out to about R7 777 per meter. Let's say your office is five square meters, this means your office space has a value of about R38 885.
 
This is the amount you'll pay GCT on if you make a profit on this portion of your house. For example, if you put new flooring in your whole house and it pushes the value up, you'll have to pay CGT on the increased value of your home office space. 
 
But there's one situation when you'll have to pay even more CGT on this space.
 

You'll pay even more CGT if you sell your house

 
When you sell your house, you're 'disposing' of your capital asset (your office space). This means you'll pay CGT on the amount you received for that space.
 
So now you know, your home office is a great benefit, but it'll cost you in CGT and could out the money you saved on petrol.
 


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