Taking work home
Running a business from your residence requires a little homework, particularly on financial matters, writes Amy Noonan.
THEY are the people who make their home work – literally. As more people are choosing to work from home part time or even run their entire business from home, it pays to be aware of the financial implications.
The latest data from the Australian Bureau of Statistics shows that 24 per cent of workers – some 2.4 million people – worked some hours at home in 2008.
Harris Real Estate managing director Phil Harris says potential buyers are demanding home office space when looking for a new home.
‘‘Without a doubt, we are seeing more buyers looking for spaces in an existing home where a potential office could be set up,’’ Mr Harris says.
‘‘I have noticed a spike in these types of requests over the past 10 years as the working environment continues to change.’’
HLB Mann Judd tax and business services partner James Hooper says there are a multitude of tax benefits to working from home.
‘‘You can claim a percentage of the running costs of your house, which is based on the percentage of total floor area,’’ Mr Hooper says.
‘‘You might have one or two rooms set aside as an office area and you work that out as a percentage.’’
The claim list can include cleaning fees or office products, council rates, water bills and mortgage payments.
Anyone building a new house or converting a former commercial building, such as a warehouse, into a home could claim a percentage of building costs, Mr Hooper adds.
‘‘You can claim capital write-offs, the cost of building work written off at 2.5 per cent.’’ And don’t forget about fixtures and fittings.
‘‘If you’re fitting out the office with items like curtains and blinds, they’re now capable of being depreciated.’’
However, anyone planning to claim needs to be aware of the financial flip side. ‘‘As soon as you start claiming part of your house as a place of business, claiming a percentage of the mortgage, your house is now subject to capital gains tax when you sell it,’’ he says.
‘‘When you sell the house, half of the capital gain will be taxed at your rate of income and it could push you up into the next tax bracket.’’
Scott Salisbury general manager Chris Schutze says people who build new homes are now requesting home offices, often with separate entries.
‘‘Studies were always nice to have but I think these days they are actually being used as home offices,’’ Mr Schutze says.
Jade Pace, owner of Guys & Dolls hair and beauty, started working from her home at Mawson Lakes this year.
She doesn’t claim on the mortgage because of the capital gains but she does claim on utilities.
Ms Pace says working from home is financially far better than working in a salon.
‘‘If you’re renting a chair in a salon, you still have to give a percentage of your pay to the owner. If you go into business for yourself, there’s more overheads – rent on a salon, having to employ staff to gain the benefits. It’s much cheaper running a business from home,’’ she says.
However, the main advantage for Ms Pace is the lifestyle.
‘‘I work in a great environment and there’s absolutely no commuting plus it’s a lot more personal – being my own business, I can focus on clients one on one.’’
FOCUSED: Business owner Jade Pace loves working from her Mawson Lakes home.