Do you use the apartment for business? This is an important change – it is already clear – what and how it enters the costs

Good news for entrepreneurs. The Director of the State Tax Administration agrees to furnish the apartment for business purposes without assigning a separate room for these purposes. It also allows the possibility of defining common parts of the workspace.

Entrepreneurs who start a business often list their apartment as the first space in which it is carried out. The time of the pandemic and progressive digitization favors an increase in the number of home businesses.

– The Tax Office questioned the possibility of settling costs related to the use of an apartment in business activities, if the entrepreneur did not set aside a special room for that purpose, for example one room. However, according to the current approach, an entrepreneur can use the same room for both housing and business needs – explains Piotr Juszczyk, chief tax advisor at inFakt.

In such a case, the expert advises to calculate what percentage of the space is used for business purposes and to show how many hours during the day the entrepreneur uses the space for the needs of the company. If he spends 8 hours a day working in it, and the rest of his time is, for example, the living room, the area is divided by 24 hours and multiplied by 8. It would be difficult to prove to the tax office that you work in a certain place 24/7.

The director of KIS also agrees with this approach, who points out that there is no need to set aside a separate room in the apartment:“the provisions of the law on income tax do not state that the possibility of including expenses for the use of real estate in tax-deductible expenses depends on the physical separation of the premises in which the activity is carried out. The taxpayer should indicate what part of the apartment actually serves his business. Then he can, in the appropriate proportion and proportion , include the incurred costs as tax costs.”

However, if an entrepreneur separates one room in the apartment for his “office”, then there is no need to divide the area according to the number of working hours, because that room will be used exclusively for business purposes.
After determining the appropriate index, the entrepreneur will include part of the costs of electricity or heating the apartment in the operating costs. If the property is financed with a loan, this may also include a portion of the interest on the loan as expenses.

The tax administration’s approach to meeting the costs of maintaining an apartment or house in business is constantly evolving. On September 15, the director of KIS changed the earlier interpretation, stating that the cost can be interest on the loan, in proportion to the part of general purpose, that is, the kitchen, toilet and corridor.

Money from OFE, also in the ZUS account, under …

– Therefore, in my opinion, both the rent and other fees in an appropriate proportion to the common parts could be classified as tax-deductible expenses. In times of energy price spikes, the possibility of including part of the electricity expenditure in the costs can somewhat compensate for the price increases. If an entrepreneur, for example a beautician, receives customers, they often move through the corridor, can use the toilet, are served coffee – adds Piotr Juszczyk.

Of course, it is worth taking into account the individual interpretation of the individual taxpayer’s situation. Let’s remind you that from January 1, 2023, it will no longer be possible to depreciate residential premises, but the costs can still be tax-recognized costs.

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