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.
"You’d be stupid not to try to cut your tax bill and those that don’t are stupid in business"
- Bono: U2