Can a salaried employee claim a home-office deduction?

Yes, but only if you meet all five SARS tests: (1) you have a separate, exclusively-used room for work, (2) it's specifically equipped for your trade, (3) you regularly use it for that purpose, (4) more than 50% of your remuneration must come from work performed at the home office (or 50% of services rendered if you mainly perform services), and (5) your employer must permit the working arrangement. If any test fails, no claim.

What home-office expenses can I deduct?

Apportioned to the home-office's share of total floor area: rent, bond interest (not capital), rates, levies, water, electricity, cleaning, repairs to the home, and wear-and-tear on the structure (if you own). Also: 100% of expenses directly tied to the office — internet, stationery, depreciation on office equipment, telephone for business calls. Domestic costs (kitchen, bedrooms, garden, security) are not apportionable into the office expense.

How is the apportionment calculated?

Square metres of the home-office room ÷ total square metres of the dwelling. So a 12 m² office in a 150 m² house gives an 8% apportionment ratio. Multiply that by the eligible household-wide expenses for the year (rates, electricity, etc.), then add the 100%-deductible direct expenses on top.

Is there a CGT consequence when I sell my home?

Yes, and most people don't notice. The home-office portion of the property is treated as not being your primary residence, so the R3 million primary-residence CGT exclusion is reduced proportionally. If 8% of your home was a deductible office, 8% of the eventual capital gain is fully taxable instead of falling under the exclusion. For long-held properties this can outweigh years of small income-tax savings.

Home office deduction · invoicebook.co.za

The five tests

Section 23(b) of the Income Tax Act lets you deduct home-office expenses if all five of these are true:

Separately and exclusively used. A room (or clearly demarcated area) used only for work. A kitchen table where you also eat dinner doesn't qualify.
Specifically equipped for the trade. Desk, computer, work chair, business phone — equipment that signals "this is a workplace".
Regularly used for the purpose. Not occasional; the room must be your habitual workplace.
More than 50% of remuneration earned there (for employees). Or, for service providers, more than 50% of services performed there.
Employer permits it (for employees). A clause in the employment contract or a written acknowledgement from HR.

Independent contractors and sole proprietors face the same first three tests but skip 4 and 5 — they're already running a trade.

What you can actually claim

Two categories:

Apportionable household expenses (deduct only the office's share):
- Rent, or bond interest (the interest portion of mortgage payments — not capital repayment)
- Municipal rates and levies
- Water and electricity
- Cleaning
- Repairs to the structure of the home (e.g. roof, plumbing) — not improvements
- Wear-and-tear on the building if you own (depreciation)
100% deductible (only if exclusively for the office):
- Office equipment (computer, printer, monitor) — depreciated over 3-5 years
- Stationery
- Business telephone line and business calls
- Internet, if used predominantly for work
- Repairs to office equipment

The apportionment formula

For the apportionable category, divide the office's floor area by the home's total floor area:

Apportionment % = office m² ÷ total dwelling m²

So if your office is 12 m² in a 150 m² house, 8% of household-wide expenses (rates, electricity, bond interest) is deductible. Apply this only to costs that genuinely vary with house size; you don't apportion garden services, security, or domestic-help costs into the office (they're personal expenditure).

Common-area floor space (passages, kitchens) goes into the denominator, not the numerator. The numerator is just the office room itself, even if you also walk through other rooms to get there.

A worked example

Salaried employee in Cape Town, working from home 4 days a week, earns R600,000/year. Office is 10 m² in a 100 m² flat. So apportionment ratio = 10%.

Annual rent: R180,000 → office portion R18,000
Annual electricity: R12,000 → office portion R1,200
Internet (100% business): R8,400
Office chair (depreciated over 5 years, R8,000 cost): R1,600 wear-and-tear
Stationery: R600
Total deduction: R29,800

At a 31% marginal rate, that saves R9,238 in PAYE. Multiply by 10 years and the savings compound — but watch the next section.

The CGT trap

This is what most home-office articles skip. When you sell your home, the primary-residence CGT exclusion of R3 million only applies to the part of the property used as a primary residence. The portion used as a deductible home office is treated as not primary residence, and the full capital gain on that portion is taxable.

So if 10% of your dwelling is a home office, when you sell, 10% of the gain misses the exclusion. On a property bought for R2m and sold for R5m (R3m gain), the office's R300,000 share of the gain becomes fully taxable. At an effective CGT rate of ~18% for individuals, that's R54,000 of tax that you'd otherwise have escaped.

For people who claimed home-office for a few years and saved a few thousand a year, the eventual CGT bill on sale can wipe out most of the cumulative income-tax saving. Run the numbers — for a high earner in their forever home, the deduction is worth it; for someone who'll move within 5 years, often not.

Documentation

SARS routinely audits home-office claims. Keep:

Photos of the office showing the dedicated workspace
Floor plan with measurements showing total dwelling and office
Employer letter (or contract clause) confirming work-from-home arrangement
Copies of all bills used in the apportionment
Time records / calendars showing the 50%+ test is met

Without these, expect a verification request and possibly a disallowance plus interest.

Practical takeaway

The home-office deduction is real but narrow. If you genuinely have a dedicated office, work from it more than half the time, and your employer permits it (or you're self-employed), it's worth claiming. Just keep the CGT consequence in mind when you sell — the deduction comes with a back-end cost that doesn't show up on the ITR12.