Home Office – Personal LTD Company

Building a Home Office to Carry out Contract Work

The capital purchase price of building a shed or extension to your home would not be an allowable tax deduction.
For it to be purchased by the company, the below criteria must be met:
(i) The land you are building should be owned by the company
(ii) That the build is not seen as an addition or enhancement to the property
(iii) The building or extension is wholly and exclusively and necessarily used for the purposes of your business
(iv) The majority of your contract work must be from home office

Fit out cost

If you are building a home office exclusively for the purposes of your contract work, there may be some allowances you can claim once you can show it’s wholly and exclusively for your contract. You can claim 12.5% allowance each year on the below items that are claimable for a maximum period of 8 years.

The following items are not claimable

(i) Fixed flooring, e.g. wooden floors
(ii) Roof
(iii) Groundworks
(iv) Fixed lighting
(v) Windows
(vi) Renovations

The following items may be claimable

(i) Office furniture
(ii) Computer Equipment
(iii) Mobile Heating fans
(iv) Maintenance and Painting

Operating Costs

Once you are up and running in the home office, you may be
able to claim the following running costs.
(i) Telephone
(ii) Broadband
(iii) Light & Heat (Apportionment)
(iv) Upkeep of office
(v) Software costs
(vi) E-worker allowance of €3.20 per day
(vii) Insurance costs
You may claim full tax relief on the above when you can show they are wholly and exclusively required for your business, where the full amount is not claimable (like Light and Heat) then you must come up with an apportionment.

Rent

1. If you own your home and your company is paying you rent then, the rent is taxable in your hands and you must declare to Revenue, there is no tax advantage to this
2. If you are renting the property and you wish to claim a portion of your rent, we advise that your apportionment is accurate to the amount of work that you are carrying out at home, Revenue would not allow a deduction against incidental work rather you would need to be working full time from the property and have a robust method of apportionment along with correct paperwork from the Landlord

Rates & Planning

If the office building is used solely for business, then technically you may need planning for change of use and must pay rates. If the office is of mixed use, you don’t need planning.
Ultimately it will be up to the Valuation office to decide so therefore if building we suggest you take legal advices

Capital Gains Tax

Where an employee uses part of their home for work purposes, the CGT exemption for Principle Private Residence will not be affected.