With advanced technology, and increasing rent, most small businesses are run from home to save on cost and travel. Unfortunately, most of the small business owners are not aware that conducting a business from home could be potentially subject to CGT especially if you are a sole trader.
Usually, your family home is exempt from Capital Gains Tax (CGT) as it is your main residence, however, if you are a sole trader running the business from home, you could potentially expose your main residence subject to CGT. The question here is not whether you claimed any occupancy expenses whilst running the business from home, but the fact would be based on whether your were eligible to claim the cost of running your business from home.
The few exemptions are:
- Businesses run under a company or trust structure will not have the CGT implications.
- Businesses operated from a rented home will not have CGT implications.
So before you start running your business from home, talk to your Accountant or Tax Agent.