How do I claim home office expenses in NZ?

You may be able to claim a portion of your household costs as a business expense if your home is used regularly for running your business and you have a dedicated working space (for example, a spare room or clearly defined office area).

You don’t need a separate building or elaborate setup — just a space that is genuinely and primarily used for business purposes.

There are two methods you can use to calculate your home office claim.

1. Actual cost method

Under the actual cost method, your claim is based on:

• the size of the area used for business, and
• the actual household costs incurred.

A dedicated space might include a spare room used to store equipment or inventory, as well as a desk, chair and computer. Shared or casual workspaces (such as working on the couch or kitchen bench) are not considered dedicated home office spaces.

How to calculate your claim:

1. Measure the area you use for work (in square metres).

2. Divide this by the total floor area of your home.

3. Apply the resulting percentage to eligible household costs.

This method can result in a higher claim, but it requires accurate measurements and good record-keeping.

2. Square metre rate method

Inland Revenue allows you to use a square metre rate to simplify home office claims. This rate is updated each tax year and covers common household expenses.

How to calculate your claim:

Home office expense = home office area (m²) × Inland Revenue square metre rate

To use this method, you must still have a dedicated working area. You cannot separately claim expenses that are already included in the square metre rate.

If you work from an open-plan living area, you may still be able to claim home office expenses — but only for the portion of the space that is clearly and mainly used for business.

Start with the total open-plan area, then exclude spaces that are obviously private or domestic, such as:

• kitchen benches
• dining tables
• sofas and household appliances

You should also exclude walkways, unused floor space, and general traffic areas.

What remains is typically the area where your desk, chair, computer and other business equipment are located, along with the space required to use that equipment. This area must be primarily used for business, not shared or occasional use.

Each household cost needs to be assessed as:

• business-related,
• private, or
• partly business and partly private.

Costs that relate to both business and private use must generally be claimed using the floor area apportionment.

Partially deductible (apportionable)

• power and gas
• home and contents insurance
• rates
• water charges
• telephone and internet (commonly 50%, unless clearly business-only)
• rent or mortgage interest (not mortgage principal repayments)
• repairs and maintenance relating to the whole home
• cleaning costs

Fully deductible (100% claimable)

• business-only telephone line
• office supplies and consumables (e.g. stationery, printer ink, paper)
• direct repairs to the home office area

Not deductible

• mortgage principal loan repayments
• personal expenses
• renovations that add value to the whole house (capital in nature)

If you are registered for GST, you can generally claim GST on the business portion of household costs such as:

• power and gas
• telephone and internet
• electricity
• rates

You cannot claim GST on rent or mortgage interest.

If you purchase office furniture or equipment:

• items costing under $1,000 can generally be claimed in full
• items costing over $1,000 must be capitalised and depreciated

If an item is used for both business and personal purposes, only the business portion can be claimed.

As with all business expenses, good record-keeping is essential. You should retain:

• receipts and invoices
• utility bills
• floor area calculations
• details of asset purchases

Records generally need to be kept for at least seven years. A practical approach is to photograph receipts and store them in your accounting software (such as Xero) or a dedicated digital folder.