Home office

[oscarlets]

Hi All
Things are bit tight business wise and would like to cut costs,I am thinking of buying a house and turn one room into an office,I am currently renting but I am thinking of,if I buy a house on my personal capacity and rent out the room to the business would help me stay affloat,

What is the best way to buy a house and turn part of it into an office?
What is the best approach? Buy through a bank or estate agent?
FNB homeloan charges 9.5% interest and Property 24 bond calculator show that the transfer cost will be around R9000 and I don't want to go through that,its too much,do I have a better option?

and want to have fixed bond repayment,What is the best way? I don't have hard cash to buy the house for cash. Please advice.

 

[SAdata]

Be prepared to be forever audited by SARS. They love home offices and partial use of primary residences .. But if your tax is sorted you are fine. If you buy in a new development (from a developer) you won't have transfer duty. If you buy a 2nd hand home previously owned by a company you will have VAT added onto the purchase price (I don't know if this could be lumped into your bond or if you would have to pay for it upfront). If you buy a 2nd hand home from an individual then you will have to pay transfer duty.

 

[oscarlets]

Thank you SAdata.

 

[F1 Fan]

Thank you SAdata.

So you want to buy a house, live in it and turn one room into an office?

 

[oscarlets]

Yes F1 Fan. I am spending alot on rental and we are only 4 here. So if I buy a house and rent a room to the business I think I'll save. I am currently renting. Residential and commercial so I think I will save if I manipulate the two situations.

 

[ToxicBunny]

Be prepared to drop R50k on transfer and registration costs, not R9000...

and 9.5% interest is pretty decent...

Do you run your own business? If so, you don't necessarily need to rent the room to the business, you can offset costs in your tax return against the cost of owning the house... Also be aware of the restrictions of commercial operations in residential areas... technically its not allowed and could get you into trouble if your neighbours complain.

 

[oscarlets]

Thank you ToxicBunny why are you saying I must be prepared to drop R50k on transfer? Eish it sounds scary. Yes I own the business.

 

[rrh]

Be sure to do the arithmetic.

The rental that you charge the company will be taxable in your hands, with only the (size of the room as a percentage of the size of the house) * interest on the mortgage being tax deductible.

 

[oscarlets]

Thank you rrh I have noted your advice.

 

[ToxicBunny]

Thank you ToxicBunny why are you saying I must be prepared to drop R50k on transfer? Eish it sounds scary. Yes I own the business.

Transfer Fee, Bond Registration, Lawyers fees...

If the property is below R600k, you seem to be in for R30k (give or take), and it just goes up from there.

R1m property, R50k (give or take)

R2m property, R125k (give or take)

 

[oscarlets]

Thank you ToxicBunny I now understand. *holding head*

 

[Noquarter]

Oscar what type of business did you say this was.

 

[oscarlets]

@Noquarter Telesales.

 

[Noquarter]

@Noquarter Telesales.

Are you currently the sole tenant or are you sharing rent with someone else?

 

[oscarlets]

Im renting at an office building designed to rent for businesses and im one of the tenant there, im not sharing rent and my lease is expiring in June hence im contemplating to rent from the house im going to buy.

 

[Noquarter]

Sharing office space with another small entity could be another alternative to cut costs. Maybe place an ad in the news paper, local area business ad booklet and/or Gumtree. See what falls in your lap

 

[Noquarter]

Im renting at an office building designed to rent for businesses and im one of the tenant there, im not sharing rent and my lease is expiring in June hence im contemplating to rent from the house im going to buy.

Oh so you are in the process of buying already?

 

[oscarlets]

I am thinking of buying. I think renting is wasting my time. Bond repayment vs monthly rent. And I want to use the business to meet me halfway