Home Office Expenses And Ppp Loan

If i did not claim a home office expense in 2019 can i use the ppp for it.

Home office expenses and ppp loan. If the loan is used for this purpose it must be repaid. Not eligible for ppp loan forgiveness. For self employed individuals with a home office you apply the percentage used for your home office deduction to determine allocable mortgage interest rent and utilities. Home related expenses are explicitly prohibited in the interim final guidance on ppp loans.

Generally the ppp loan amount that businesses qualify for is based on their average payroll expenses. For those that have a home office you can claim a portion of the mortgage rent and utilities based on the percentage of your home used as a home office. How to track spending for on non allowable expenses. Review this list of qualified expenses for maximum forgiveness on your loan though the initial round of payroll protection plan ppp loans are exhausted small business owners that applied and were approved in time are now receiving their loan proceeds.

Interest payments on any other debt obligations that were incurred before february 15 2020 note. Line 9 ppp. So a home based proprietor will have zero additional expenses to count towards the ppp. Ppp loan forgiveness application guidance for the self employed freelancers and contractors.

You can spend ppp funds received on non allowed expenses but know those expenses won t be forgiven you will have to repay them along with loan interest. Especially if you don t have an office or home office space. However since sole props and contractors usually don t have payroll their loan is based on 2019 net profit divided by 12 to get a monthly average net profit. Yes the sba s interim final rule makes an exception for this.

For these borrowers the 8 week forgiveness period has begun and they are beginning to plan. Most businesses applied for the ppp loan expecting not to have to pay it back. The ppp loan must be repaid within two years the interest rate is a low 1 percent. To be forgiven 75 of the loan amount needs to be used on payroll expenses.

If you were eligible to claim a certain home office expense but didn t for whatever reason you can still use the ppp funds to pay for it over your eight week forgiveness period and qualify for forgiveness on that expense. Proceeds from the ppp loan can be used to cover your mortgage rent office lease utilities payroll costs and your net self employment earnings. Let s say our proprietor with 48 000 of income and a 10 000 ppp loan works from home.