How do NZ sole traders claim home office expenses?

New Zealand sole traders who work from home can claim a proportion of their home running costs as a business expense. There are two methods: **Method 1 — Flat Rate (simplest):** Claim NZ$5 per week for each week you use your home for business. This gives a deduction of NZ$260 per year. No receipts are needed for this method — just record the weeks you worked from home. **Method 2 — Actual Costs:** Calculate the business proportion of actual home costs including rent or mortgage interest, rates, insurance, power, and internet. The proportion is typically based on the floor area used for business as a percentage of total floor area, multiplied by the time it is used for business. For example, if your home office is 10% of your home's floor area and you use it exclusively for work 5 days per week (approximately 70% of the week), your deduction proportion would be 10% × 70% = 7% of home costs. Most sole traders find the actual costs method yields a higher deduction, especially in high-rent areas like Auckland or Wellington.

• Flat rate: NZ$5/week (NZ$260/year) — no receipts needed
• Actual costs: floor area proportion × time proportion
• Costs include: rent/interest, rates, insurance, power, internet
• Keep records of home office use if using actual costs method
• Cannot claim home purchase price — only running costs