Can I Claim Depreciation When Operating a Home-based Business?

Many homeowners aren’t aware of profitable depreciation deductions available to them if they are running a home-based business. If you are also one of these home-based business people, you may be interested in learning more about your rights. Amid comfort, and flexibility that you get working from home, it’s no surprise many people have resorted to such work patterns. Today approximately one million people are working from home that constitutes a large part of the Australian community. If you are one of these people, you will benefit from hiring a professional to calculate your property depreciation tax deduction.

Expenses that you are eligible to claim while operating from home:

You can claim huge tax depreciation deductions if you are operating from home. The ATO makes it possible for owners of income-generating land to claim depreciation deductions. The owners can claim depreciation on the building structure or capital works and on plant and equipment. When managing a home-based business, similar rules will be applicable to the home’s area and assets used for generating income. Owners will be eligible to claim an apportioned tax deduction for phone expenses and home office utilities. It will not include expenses of phone installation. In some situations, you may also claim occupancy expenses like mortgage interest, rent, insurance, etc. However, you may also consult experts or your accountants to make sure if your business qualifies for the same. You must check your property depreciation schedule at a regular interval.

House owners will be able to depreciate a part of the expense of their house used for running a home business. The owners will also be eligible to deduct expensed incurred for repairs directly to the office premises.

Rules: If you seek to make your home office to qualify for tax depreciation deductions, you need to follow some rules. You need to operate your business from your home; you should perform the income-producing activities from home. The expenses generated must be directly related to using the home for operating the business. If you are running a small business with a turnover of approximately $10 million from July 1, 2016, you will get immediate asset write-off of nearly $30,000. For this, you should have bought the assets from April 2, 2019, to June 30, 2019. Different asset write-off brackets will be applied for purchase made prior to this. In case the home-based business happens to be a small one, all assets shown will qualify for immediate asset write-off. Get your property depreciation reports prepared by your accountant.

Capital gains tax: It is the amount you pay to the government while selling an asset that has witnessed a rise in its value since its purchase. A house is exempt from CGT unless a part of it is income generating and you bought it on or after September 20, 1985. In maximum cases, you may overlook a capital gain or loss you produce while selling your home under the main residence exemption.

If you began using your home as the main business area after 20 August 1996, you cannot claim capital gains. You will also not qualify to claim the main residence exemption as well for the period before this date.


The above points will help you find depreciation for property. If you are working from home, you can claim a profitable depreciation deduction. If you are not aware of it, you may lose thousands of dollars. Now many people are carrying out home-based businesses as it offers huge comfort and flexibility. You can seek a valuation of your home while beginning the new home business. Otherwise, you may have to shell out more in capital gains tax while selling your property.

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