A property’s zoning will also state whether a business can be run from home
Self-employed people working from home fulltime should bear in mind, if they have regular staff or clients visiting the premises, they will have to apply for consent from their local municipality, cautions Lew Geffen Sotheby’s International Realty’s Chris Cilliers.
Craig Guthrie, specialist commercial attorney from Guthrie Colananni Attorneys, says a person working from home who shows no evidence of it, like a freelance writer or designer who does not have clients visiting the premises, need not worry about applying for consent.
However, other business operation types will need to. Furthermore, a property’s zoning will also state whether a business can be run from home. Workers who live in sectional title schemes will also need to comply with the Sectional Titles Schemes Management Act.
The law, however, states the following with regards to different property types:
Property Zoned Single Residential: Owners living in a property zoned as Single Residential may, as an additional use right, conduct a “home occupation” from their property, in accordance with item 21 of the Municipal Planning By-Law, says Guthrie. This is as long as they comply with conditions such as:
- Only having a single, un-illuminated sign.
- Not conducting activities that cause a public nuisance.
- Not showing any external evidence of the home occupation – apart from the single sign.
Sectional Title: Running a business from home in a sectional title scheme is regulated by the Sectional Title Schemes Management Act. Guthrie says this states that if an owner of a section or exclusive use area wants to work from home, but this conflicts with the purpose of that section or area, they need to get the written consent from all other owners in the scheme.
Another issue relates to capital gains tax. Claiming tax deductions for a home office will impact a property owner’s capital gains tax on a primary residence when selling says Brendan Miller, chief executive of Lew Geffen Sotheby’s International Realty Atlantic Seaboard and City Bowl.
“Although a home office can mean a considerable saving on overheads, especially for small businesses, it is wise to consult a tax consultant.”
Qualify for tax deductions
Self-employed individuals and employees who often work from home may be able to claw back some of that cost from the taxman, says Gerhard Kotzé managing director at RealNet Properties.
However, there are some conditions that must be met in order to qualify for home office deductions. First, if more than 50% of your income comes from a salary, you can only qualify if your employer allows or requires you to work from home and you spend more than half your working hours in your home office.
However, you should qualify if most of your income (more than 50%) comes from commission and your employers do not provide you with an office at their expense. You will definitely qualify if you are a small business owner or a freelancer who always works from home.
Second, Kotzé says, you must have a specific part of your home which is used exclusively as your office. “You can’t just work off your dining room table or hold meetings in your TV room. You need to have a separate space that is permanently set up for work and properly equipped with whatever you need to do your job.”