If you’re transitioning to working from home, setting up a comfortable and efficient home can help maximise your productivity.
However, converting a space in your house or backyard into a successful workspace can cost a pretty penny.
From an ergonomic office chair to a filing cabinet, proper lighting, and broadband connection, it’s easy to see how the expenses can add up quickly.
So, how can you finance your home office setup? Here are some options.
Personal Loans
A personal loan can give you the cash you need to build your home office. It’s quick to access and typically has a lower interest rate than credit card debt. You can get up to $75,000 with personal loans at an indicative rate of 6.57%.
However, keep in mind that the interest rate for personal loans is risk-based and can vary depending on your income, credit score, and expenses, among other things. Most providers offer unsecured and secured personal loans. Unsecured loans do not require security, but they have higher interest rates.
With a fixed-interest rate loan, you can spread out the payments over time, making it easier to afford the necessary upgrades without straining your immediate finances. Loan terms usually range from one to seven years, and you can opt to repay weekly, fortnightly, or monthly.
Credit Cards
A credit card can be another convenient way to finance your home office. Many credit cards offer very low “honeymoon” interest rates on purchases to new customers for a specified period.
If you can pay off the balance within this timeframe, you can effectively finance your home office at zero or near-zero interest rates. However, be cautious of high interest rates once the introductory period ends.
Interest-Free Payment Plans
Some retailers offer interest-free payment plans, allowing you to spread the cost of your purchases over several months without paying interest. This option can help you get a quality desk, an ergonomic chair, and other costly home office necessities.
Interest-free payment plans can range from several weeks to more than a year, and you can apply in-store or online. Once approved, you can take your furniture home immediately and start enjoying your new home office setup while paying it off gradually.
Salary Sacrifice
Salary sacrifice or salary packaging allows you to pay for your home office equipment with your pre-tax salary, reducing your taxable income and, as a result, your tax liability. This increases your disposable income, providing you with extra money that you can spend on your workspace.
Spreading the cost over several months eliminates the need for an immediate large cash outlay, making large purchases more manageable. Some eligible items you can purchase with salary packaging include computers, software, monitors, furniture, and repairs.
Seek Employer Assistance
Some employers offer reimbursements for home office expenses. Check with your HR department to see if your company provides financial support for remote workers. This can help smoothen and quicken your transition to remote work, but unlike salary packaging, ensure you include any reimbursement for home office expenses in your taxable income.
Tax Deductions on Home Office Equipment
While you’ll still need to equip your office first, the good news is that you can get some of your money back through tax deductions. According to the Australian Taxation Office (ATO), you can claim deductions on computers, printers, furniture, and work-related phone expenses.
You can also recoup some of the money spent on heating, cooling, lighting, and repairs on your home office equipment. Remember to record all your expenses and consult a tax professional to maximise your deductions.
