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[FAQ] Home office expense regarding solar installation
- 22 August 2023
- Case study: Home office expense
- The Tax Faculty Tax Specialist
This article is based on tax law for the year ending 28 February 2023.
Question:
A sole proprietor who operates a home-based business, utilising a dedicated office space consisting of 7% of the total home area. The taxpayer installed solar equipment during the 2023 tax year. Does the taxpayer qualify to claim an immediate deduction for 7% of the cost of the solar installation as a direct expense? Alternatively, is the taxpayer required to capitalise and depreciate the cost of the solar equipment?
Answer:
Individuals have the opportunity to claim a reimbursement of up to 25% of the PV solar panel expenses, limited to the amount of R15,000. However, it's important to note that these costs cannot be treated as a trade asset or a deductible expense. Instead, taxpayers can explore specific provisions within home office expenses that provide certain allowable deductions.
Join Carmen Westermeyer for our September TaxCafé Discussion Forum, where she will focus on resolving current tax issues experienced in practice.
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