All Topics / Legal & Accounting / Are you liable for Capital Gains tax on your PPR if you claim a small portion of it as a Home Office tax deduction?

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  • Profile photo of pyramidpyramid
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    @pyramid
    Join Date: 2005
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    January 7, 2009 - 12:03 am

    Claiming a home office tax deduction on a portion of your home is akin to renting a small part of the home for the office. Does this mean that that portion would be subject to capital gains tax?

    Profile photo of TerrywTerryw
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    @terryw
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    January 7, 2009 - 12:13 am

    Yes, I believe so.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    January 7, 2009 - 12:16 am

    Hence consideration needs to be made before you start trying to claim the property as a Home Office etc.

    Richard Taylor | Australia's leading private lender

    Profile photo of pyramidpyramid
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    @pyramid
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    January 7, 2009 - 12:24 am

    Thought so! There's no escape. They get you one way or another.

    Profile photo of TerrywTerryw
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    @terryw
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    January 7, 2009 - 2:02 am

    Many people have probably received no advice, or even bodgy advice,  and will end up paying thousands more inn CGT in order to save a few hundred in income tax.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Ben EllingsenBen Ellingsen
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    @ben-ellingsen
    Join Date: 2007
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    January 7, 2009 - 7:50 am

    There is a difference between claiming your office as a "home office" and a "place of business". When claiming as "home office" there is no CGT implications but you are limited to claiming running expenses ie. depreciation on furniture and the statutory 26c/hour as prescribed by the ATO for lighting, heating, etc. When claiming as "place of business" occupancy expenses are claimable ie. rates and interest.
    The "place of business" is only eligible for people operating a business from their home, not people who work from home but are employed by a third party.

    Profile photo of Edvico_kvnEdvico_kvn
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    @edvico_kvn
    Join Date: 2008
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    January 8, 2009 - 1:52 pm

    I'd also be careful of the Land Tax implications.

    You may cop a land tax assessment (i.e losing the main residence land tax exemption to some extent) due to claiming occupancy home office costs in the tax return.

    The ATO and Office of State Revenue do sometimes corroborate taxpayer's information. 

    So consider both the CGT and Land Tax implications before claiming home office occupancy costs

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