The tax implications of working from home in South Africa
But not many realise that doing so can affect their capital gains tax when they sell their home, says Sohail Govender of Just Property who outlines what you need to know if you sold your primary residence between 1 March 2021 and 28 February 2022.
The primary residence exclusion is an exclusion on the first R2 million of your capital gain. The remainder of the capital gain will be subject to capital gains tax, said Just Property. To work out your net capital gain or loss, of which the first R2 million can be excluded, take the proceeds – the amount you sold the property for – and subtract the base cost – the original cost price paid for the property plus any improvements, said Govender.Mr A has sold his primary residence for R3 000 000, which he originally purchased for R1 400 000 on 1 October 2001. In 2008, he installed a pool at a cost of R100,000.
Each spouse will have a capital gain of R1 000 000, less the primary residence exclusion of up to R1 000 000 each, meaning that the gain included in taxable income will be nil for each of the parties, Just Property said.If you’re someone that works from home, claiming for home office expenditure on your tax return sounds like a great idea. But when doing so, think twice because this could affect your capital gains tax when you’re ready to sell.
Portion of the capital gains attributable to the property’s use as a home office : R2 000 000 × 4/12 × 10%=R66 666.
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