Building a Home Office - Home Office Expenses

Are you looking to build a home office to carry out your contract work?

Below we go through what is tax claimable for a Personal Ltd Company when building a home office for carrying out your contract work

In order for the outlay to be claimed in the first place, the following requirements must be met:

1. The land you are building should be owned by the company
2. That the build is not seen as an addition or enhancement to the property
3. The building or extension is wholly and exclusively and necessarily used for the purposes of your business
4. The majority of your contract work must be from the home office

Please be aware that the capital purchase price of building a shed or extension to your home would not be an allowable tax deduction.

Fit out cost

If you are building a home office exclusively for the purposes of your contract work, there may be some allowances you can claim once you can show it’s wholly and exclusively for your contract.

You can claim 12.5% allowance each year on the below items that are claimable for a maximum period of 8 years.

The following items may be claimable

1. Office furniture
2. Computer Equipment
3. Mobile Heating fans
4. Maintenance and Painting

The following items are not claimable

1. Roof
2. Groundworks
3. Fixed lighting
4. Windows
5. Renovations
6. Fixed flooring, e.g wooden floors

Operating Costs

Once you are up and running in the home office you may be able to claim the following running costs:

1. Telephone
2. Broadband
3. Light & Heat (Apportionment)
4. Upkeep of office
5. Software costs
6. E-worker allowance of €3.20 per day
7. Insurance costs

You also may claim full tax relief on the above when you can show they are wholly and exclusively required for your business. Where the full amount is not claimable (like Light and Heat ) then you must come up with an apportionment.

Rent

1. If you own your home and your company is paying you rent, then the rent is taxable in your hands and you must declare to Revenue, there is no tax advantage to this
2. If you are renting the property and you wish to claim a portion of your rent, we advise that your apportionment is accurate to the amount of work that you are carrying out at home, Revenue would not allow a deduction against incidental work rather you would need to be working full time from the property and have a robust method of apportionment along with correct paperwork from the Landlord

Rates & Planning

If the office building is used solely for business, then technically you may need planning for change of use and therefore have to pay rates. If the office is of mixed use, you will not need need planning.

Ultimately this will be up to the Valuation office to decide, so therefore if building we suggest you take legal advice.

Capital Gains tax

Where an employee uses part of their home for work purposes, the CGT exemption for Principle Private Residence will not be affected.

If you have any questions on claiming for your home office don't hesitate to get in touch:

Email info@iconaccounting.ie or call the Icon Accounting Advisory Team on 01 8077106