Save tax with a home-based business
Home-based businesses are small businesses that operate from the owners home. The attractions of starting and running a business from home include:
- Tax savings from making some of the home occupancies costs tax-deductible.
- Reduction in overhead costs.
- More work time as no time is lost commuting in traffic.
- It improves work/life balance.
A home-based business will be entitled to deduct a portion of their home occupancy costs, including home mortgage interest, 2.5% building write-off, rates, rent, insurance, and maintenance. The amount claimed is calculated as a percentage of the floor area (in metres squared) of the house, garage, and land that is used exclusively for business purposes. For home-based businesses, this averages 10-25% of the total.
Although operating a home-based business will make the primary residence subject to capital gains tax on the sale, applying the small business CGT concessions will reduce this liability to nil.
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"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2