Sole trader home office questions.

Situation 1:
A sole trader rents a house and has a home office that takes up 10% of the total house floor area. No clients ever visit, there is no advertising outside the house and no "commercial activity" takes place there. It is used only as a work space / practice space / studio for the sole trader alone in order to prepare his work, do research, store tools, do his paper work, etc.
- Can the sole trader deduct 10% of his rent and energy bills as an expense?
- Is he liable to pay rates on this room?
- Would this cause a problem for his landlord regarding capital gains tax if the house were to be sold sometime in the future?

Situation 2:
Same as above except the sole trader uses the room only some of the time for work (say, 25%).
Same questions as above (except the claim would only be for 2.5% of the rent and bills now.

Thanks in advance

Anyone any ideas?

Hi Alryn,

The expenses in Situation 1&2 look reasonable. I cannot see Revenue having any problem accepting them.

I'm not sure about rates - I doubt if it would be considered a commercial property.

I can't see how the landlord would run into problems with CGT. In renting out the house, the landlord will generally give up the Principal Private Residence Relief on the property for the period that they do not occupy the house.

Hi. Thanks for that.

Forgot about that aspect of ppr relief.