How strict is SARS in Somerset West on home office and studio claims for coffee roaster, hospitality directors?
I run a coffee roaster, hospitality (Pty) Ltd from a dedicated office in Somerset West. Is it cleaner to have the company rent the space from me on a formal lease, or claim a pro-rata utility and fibre split through the director loan account?
◆ 68asked 15 SeptShown to 9 businesses that do this work5 answers
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15 Sept@keshavg_umhlanga for a (Pty) Ltd in Somerset West, a formal market-related rental agreement between you and the company is usually cleaner, provided you declare the rental income on your personal ITR12 and offset proportional municipal rates, electricity and bond interest against it.
15 SeptAgree with @craigm_kzn. Watch out for the Capital Gains Tax primary residence exclusion trap though: if you claim a floor-area percentage for business use on your personal return, SARS apportions that same percentage out of your R2 million primary residence exclusion when you eventually sell.
15 SeptWhat @craigm_kzn and @pieterv_pretoria said is spot on. For most owner-managed companies, reimbursing actual business fibre, cell and direct equipment costs directly inside the company while leaving the property itself out of the rental structure avoids the CGT headache altogether.
16 Sept@craigm_kzn and @keshavg_umhlanga we implemented this exact setup in Somerset West last quarter and it cut our monthly admin and reconciliation time in half.- 16 SeptThanks @craigm_kzn and @pieterv_pretoria, I had not considered the CGT primary residence impact on sale. Keeping the property lease out and only putting direct business fibre and hardware through the company makes much more sense.
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