The Office at Home

If you are facing the dilemma of not being able to move house - have you thought of a total re-vamp to convert part of your home into an office. (Think of the tax breaks!)

Working and living at home is becoming so popular that some construction companies are even building brand new homes to an office/home design.

Each office has its own entrance that is separate from the family entrance. It also has its own high speed internet access, shelving and plush carpeting; you may also prefer to have a bathroom in the immediate vicinity.

More people are turning toward this solution, especially if they bought a home out in the suburbs just before the price of gas rose. In planning a home office, one of the first questions to ask is: will clients be coming to visit me here, or is this office to be just 'my space'?

If the office is just your space, you can easily adapt a landing, a small closet or a stairwell, but if you will be greeting people at your office, it must obviously be big enough and private enough.

Dealing with the bigger office first, if you are serious about this, the family home area will be relegated to second place, with the office entrance having at least equal importance at the front of the house.

Allowing the entranceway to lead into a small anteroom or hallway will mean that you will have privacy in your office if someone arrives when you are already engaged with another visitor or on a telephone call.

Do not skimp too much on setting up. For instance, your own business telephone line will be useful as well as a cell phone, and caller ID on both of them will save your precious time.Once you have chosen filing cabinets and a desk that suits your space and your needs, you can 'set up' your equipment.

Choose carefully between a desk top and a lap top to go with your printer, and if you will need written confirmation you will also need a fax. Once these are in place, you are nearly ready to go.

Regardless of whether you choose a big office or a little nook somewhere, you may qualify for tax relief. In 1999 the IRS changed the 'home as office' definition for tax purposes. This is to allow workers who work outside the home but actually do their paperwork and billing from the home, to still qualify for some percentage.

If your office space uses one tenth of your house, and you claim 10% of your home depreciation, you can also claim 10% of home insurance and utilities etc. In order to claim, you must be able to show one room that you use 'exclusively' and 'regularly' for your office use. However, this has been previously acceptable to the IRS that the same room has actually been a dining room, so it may easier to claim than you think.

Before you happily adopt this idea, it may be wise to consult a tax expert, because any amount of your home that you have claimed as home/office tax deduction may be later calculated in any capital gains investment you make on the same home.

However, the Government does allow each person a $250,000 tax free profit margin on the capital gains allowance, so it is worth looking into.

Once you have decided, you just need to put up the sign outside your home, turn your front yard over to car parking and you are ready to go.

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