Can I deduct business premises used by my family?

Direct answer

Family or private use of premises must be identified before claiming a business deduction. SARS says that a home office must be regularly and exclusively used for trade and specifically equipped for that purpose. Where a room is also used by family members, as a guest room, TV room, dining room, passage or storage area, that use can be material to whether a home-office deduction is available at all.

Do not begin with a percentage. First establish whether a defined area qualifies for trade use under the current rules. Only then consider which costs are connected to the premises and how an appropriate apportionment should be calculated.

What this means in practice

Map the actual premises. Mark the total floor area, the specific room or rooms used for trade, how they are equipped, when they were used and who else used them. Keep photographs, a simple plan, lease or ownership documents, utility bills and work records. A desk in a shared family room does not automatically create a dedicated business office.

SARS's home-office guidance states that qualifying premises expenditure can include rent, repairs and costs connected with premises, such as rates, cleaning and electricity. It also says that, generally, qualifying premises costs are apportioned by floor area and period of use. The guidance stresses that this applies to expenses closely linked to premises. Other types of expense can have different rules, and an item should not be put through a premises calculation simply because it is kept in the home.

The phrase "exclusive use" matters. If children do homework in the room, visitors sleep there, the room stores household items, or a family computer is used there, record the real facts before claiming. Do not remove a few items temporarily for photographs and describe the room as exclusively used if that is not how it functions. A truthful, well-documented conclusion is safer than an aggressive claim that cannot be supported.

Consider the time period as well. A room may have been used only after the business began, or may have changed between family and work use during the year. Record dates and calculate only from evidence. Do not apply an annual fraction to costs for months in which the area did not qualify.

Step-by-step

1. Identify the claimed business area.

Prepare a simple plan with total square metres, the claimed area, equipment and actual use.

1. Test the use facts.

Record whether the area was regularly and exclusively used for trade and whether any family or private use occurred.

1. Gather premises documents.

Keep lease, rates, electricity, repair, cleaning and other relevant bills, plus proof of payment.

1. Apply the current SARS home-office framework.

If the area qualifies, calculate the appropriate premises-cost apportionment based on evidence, including floor area and relevant period.

1. Separate other expenses.

Keep equipment, furniture, data, travel and personal household costs separate. Their treatment may not follow the premises percentage.

1. Preserve the support pack.

File the plan, bills, workings, photographs if useful, ITR12 and assessment for the retention period.

Documents and records to keep

• Lease or ownership documents, floor plan and area measurements.
• Photos and equipment records showing actual trade use.
• Utility, rates, rent, repair and cleaning invoices with payment evidence.
• Diary, client records and dates establishing business use.
• Calculation schedule, ITR12 and SARS correspondence.

Important limits and exceptions

This guide does not determine whether your particular home office qualifies or calculate a deduction. The SARS home-office requirements and the individual's facts must be applied carefully. It also does not say that mortgage interest, capital improvements or every household cost is deductible.

Do not claim an area shared with family as if it is exclusively used, or use an arbitrary whole-house percentage. If the facts are mixed or the amount is material, obtain advice before submitting the return.

When to get tailored advice

Seek advice where the home has several uses, the business is conducted through a company, the property was sold, renovations were made, or the premises claim is substantial. TaxProof can prepare the factual file and cost schedule.

Related TaxProof guides

• Home office tax deduction in South Africa
• How do I fix an ITR12 validation error?

Sources

• SARS, Home Office Expenses
• SARS, Individual Deductions