The home office claim 🏠

AKA the tax deduction you're probably not getting enough out of!

The "home office claim" is based around claiming some of your own personal home costs as an expense for your business. You can do this because it is understood (and expected in this day and age) that most business owners use their personal home to undertake some business tasks.

Business Tasks At Home

The business tasks most commonly undertaken at home are general business administration tasks. These include:

• dealing with emails

• raising invoices

• bookkeeping

• organising appointments

• creating marketing items (e.g. social media posts)

etc. etc. this list could really go on

You may also be using your home to hold staff/client meetings, undertake training in relation to your business, or in some cases it can also include maintaining a physical storage space.

Let's not forget the obvious too - if you are using your personal home to conduct your actual core business activity and have a workshop or treatment room then that counts too.

The main point is, you are using your personal home for some business use.

Dedicated Business Area

The real name for "home office" is actually dedicated business area.

The word 🔑dedicated🔑 is absolutely key. For example, you may sit at your kitchen bench to do business work, but you can't simply claim your kitchen as a home office. Unless it is separate to your main kitchen and purpose-built for your business, it just can't be considered dedicated to business - you're going to need to use that kitchen personally!

Working out the area

This is worked out in square metres. Ideally, you know the actual square metreage of the area you are using for business, such as a house floor plan. But you can easily grab a tape measure and work it out yourself.

When you have a specific room dedicated to your business, such as a bedroom-turned-office, or a workshop, this is easy to measure. Just get the square metreage of the whole room.

Other areas are trickier, such as the example of working from the kitchen bench. You must use common sense and be reasonable when working out the area in this case. As mentioned above, you can't claim the whole kitchen, nor could you likely claim the entire kitchen bench. Measure the area you actually use and can reasonably be considered dedicated to business.

A really common area that is forgotten about and is often used for business is the garage. Do you store your company car in there? Do you have shelves in there to store product or files? You can add these areas to your total dedicated business area.

Then, find the total area of your home (including garage if you've including it as business use) in square metres. You will use this to work out the percentage of business use to then apply to your personal home costs and claim them.

The Personal Home Costs

So what costs can you claim a portion of?

Pretty much all costs that relate to the property can be added into the equation!:

• Mortgage interest or rent

• Rates

• Insurances (home/contents/renters)

• Power and/or Gas

• Telephone

• Internet

• Repairs and Maintenance ⬇️

Repairs and Maintenance

These costs either have to apply to the whole house (e.g. roof repair, painting) or to the dedicated business area specifically in order to claim them.

Record Keeping

Anything you are claiming for business must be kept for seven years.

We would recommend setting up a folder in a cloud document storage system and keeping all personal home invoices or statements in there, in a separate subfolder for each category.

Then, have a document that summarises all the costs for you in one place, so that when it comes to tax return preparation time and your accountant asks you for these costs, you have them easily at hand, and all supported by documentation in the background.

Other Ways to Claim Home Office

IRD release a set dollar amount per square metre each year if you want a very simplified way to make a home office claim.

While they say the rate is based on the average household use, in our experience it's always been much lower than what you could claim based on your actual costs as outlined above. Especially recently, with interest rates skyrocketing I had one client who's home office claim went from $4k one year to $12k! The IRD square metre rate would never match that kind of increase (it has gone from $41/sqm in 2018 to $53/sqm in 2024).

Get Your Accountant to Help

As with everything, these kinds of articles are written generally and are not specific advice for your specific situation. They are also underpinned with the assumption that you're not going to go all silly and try claim things you really shouldn't - always apply reasonableness and ensure you have the right justification for what you are doing.

If you need help understanding your own personal home office claim, please reach out to your accountant and they can guide you on what to do.

We prepared our own document that summarises your home costs and tentatively apportions out a business use amount to claim, see a link below to get a copy for yourself!

✨Click below to download our helpful Home Office Worksheet✨

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