Tax Deductions for Your Home Office Equipment

If you want to set up a home office for your small business, then you may already know about the potential of home office deductions. These are intended to be used as a form of tax relief for people starting up a small business, and will essentially allow you to deduct some of the expense of setting up your own home office, complete with all the equipment that you will need to run the business. What kind of equipment you can use as a deductible will depend very much upon the nature of your home business, and what you use each piece of equipment for. Learning how you can deduct these from your tax return will allow you to claim back some of the money spent on improving your office.

What you Can Deduct

If you use something in your home office, then you can make a deduction on it, but you need to take into consideration whether you have bought the equipment solely for office use, or if you are also using it part-time for personal reasons. If you have some equipment which you have converted for business use, but also use it part time for entertainment, then you can claim 50 percent tax deductions on the use, but only from the year and month in which you started to use it for business purposes. This type of property is known as listed property. Computers are generally not included in this list, but are instead regarded as property bought for business.

What you Can't Deduct

If you have set up your home office in a room which is entirely dedicated to that purpose, then you can consider that all the equipment used in that room is for business purposes. For these items, you can start to claim from the point when you began to use them for business. On the other hand, if you use only part of a room for business, and the rest is taken up with entertainment, or other living requirements, then your business does not qualify for deductions. In order to claim this allowance, you have to completely separate your home and work spaces. In addition, if any of the listed property that you use is more frequently used for entertainment (more than 50 percent), then you cannot claim those deductions on your tax return.

Understanding Claiming

Working out what to include in your home office deductions is a complex process. Working out which of your items are listed property, including photographic, phonographic and video-graphic equipment, and whether you use it for business more than 50 percent of the time is the most difficult aspect. You should include anything which is in the home office, and that resides only there, as listed property, or equipment bought for the business. Any property which has a shared use between the home office and personal use should probably not be deducted, as it is easy to make a mistake in your estimations, and claim for things which are not rightfully yours.