Home Office Expenses — New Zealand Tax Rules

Claim a proportion of household costs when working from home using IRD's square metre or actual cost methods.

Claimable: Partially claimable · Tax authority: Inland Revenue

Inland Revenue Rules

• IRD allows you to claim a proportion of household expenses if you use part of your home for business.
• The square metre method: divide the floor area of your workspace by the total floor area of the home to get the business proportion.
• Claimable costs include mortgage interest (not capital repayment), rent, rates, insurance, power, and internet.
• Multiply each annual household cost by the floor area proportion and, if applicable, by the time proportion (e.g. if you use the room for business 80% of the time).
• If a room is used exclusively for business, a full floor area proportion is claimable without further time apportionment.
• The NZ$5 per week flat rate option applies only where mixed-use costs are difficult to calculate — IRD accepts this for small, low-value home office claims.

Limits

No fixed cap — must be proportionate to actual business use. The NZ$5 per week flat rate (NZ$260/year) is a simplified alternative for minor home-office claims.

Worked Example

Aroha works from a dedicated 15m² home office in a 150m² house. Floor area proportion: 10%. Her annual household costs — mortgage interest NZ$9,600, rates NZ$2,400, insurance NZ$1,200, power NZ$1,800, internet NZ$1,200 — total NZ$16,200. She claims NZ$16,200 × 10% = NZ$1,620. Because the room is exclusively for business, no further time apportionment is needed.

Record Keeping

• Measure the floor area of your home office and total house (in m²) and keep a record
• Keep utility bills, rates notices, insurance invoices, and internet bills
• Document your apportionment calculation in writing each year
• Record the business-use hours proportion if the space is shared with personal use
• Keep mortgage statements showing the interest component separately

Frequently Asked Questions

Is there a flat rate option for home office in New Zealand?

A NZ$5 per week flat rate is available as a simplified option for minor home-office claims. However, most self-employed people working from home significantly will achieve a larger deduction using the actual square metre method. IRD guidance allows you to choose whichever method best reflects your situation.

Can I claim rent as part of my home office costs?

Yes. If you rent your home, you can claim the business proportion of your rent using the square metre method. Calculate the floor area of your workspace as a percentage of the total rentable floor area of your home and apply that percentage to your annual rent.

Does claiming home office expenses affect my property tax position?

In most cases, no. Claiming a proportion of household costs for a home office does not affect the main home exclusion from bright-line tax or the ordinary capital gain rules. However, if you structurally modify your home for business, seek specific advice. IRD generally accepts that claiming running costs does not affect your residential status.

Can I claim home office costs if I also rent a separate office occasionally?

Yes. You can claim both, proportioned to the time and cost of each. If you work from home 3 days per week and from a coworking space 2 days, claim the home office costs for the home-working days and the coworking fees for the other days. Do not double-count the same period.

How do I enter home office costs in myIR when filing my IR3?

In myIR, home office costs are entered under 'Expenses' in your IR3 return. You do not need to itemise each household bill separately — enter the total calculated home office deduction (calculated using the floor area method) as a single expenses figure. Keep your workings (floor area proportion and individual bill amounts) in your own records in case IRD requests them.