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Tax time: 8 house-related expenses you can claim.

Tax file

by Chris Lang on July 12, 2009

A s you know, in Australia the financial year ends on June 30 – which means that from July 1st on it’s time to submit your tax return.

If you have been working at home a part of the time or all the time, there are

8 house-related expenses you can claim:

1. Heating, cooling, lighting.

2. Repairs to home office, its furniture or equipment used for work purposes.

3. Depreciation of home-office furniture (you’ll need receipts for the desk, cabinets, chairs, phone, printer, fax and computers used for work).

4. Occupancy expenses – rent or interest on mortgage.

5. House insurance premiums.

6. Council rates.

7. Water rates.

8. Home office cleaning expenses.

And now a little bit about how to claim. There are basically 2 ways to do it and one is potentially more dangerous than the other.

Claim via fixed amount

The less “dangerous” and easier way is to calculate the amount of hours you spent working at your home office for the 2008-2009 financial year and to multiply that figure by 26 cents. To back up your calculation ATO advises people to keep a diary of the working hours.

So for example, if you’ve been working 5 days a week for a couple of hours from home, you’ll be able to claim 520 hours a year (2 hours per day * 5 days a week = 10 hours a week * 52 weeks a year = 520 hours).

In terms of money that will be 520 hours *

0.26 cents = $135.2

Claim via percentage of house area

The other, more “dangerous”, way is to claim your real expenses (provided you have all the bills and the receipts) based on a percentage.

Calculate what percentage of your house space your office takes by doing the following:

1. Measure the area of your entire house including your office.

2. Measure your office alone.

3. Divide your office area by your house area and you will get a percentage.

For example, your house area is 100 square meters. Your office is 9 square meters. The percentage is 9 / 100 = 9% of the house.

If you’ve worked the whole year in your home office, that means that you can claim 9% of your heating / cooling / lighting / water etc bills. And here is the catch – when you will sell your home, those 9% will affect the capital gains tax you will pay. Normally capital gains tax doesn’t apply when people sell their primary residence, but in this case, if you declared a portion of it as your office, it will.

So if you’ve claimed 9% of your home as your office, capital gains tax will apply to 9% of your capital gains – and this is valid for a period of 6 years. This is certainly something to consider before claiming as much as you can now, because it can make you pay later.

And over to you now – any tax tips you’d like to share?

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