If you run your business from home, you can often claim part of your household costs as a business expense. The IRD calls this “Use of Home for Business” and it can help lower your tax bill.
The most common way this is worked out is below:
What can you claim?
A portion of:
Power and internet
Rates, insurance, rent, or mortgage interest
How do we work it out?
We start by looking at what percentage of your home is used for business. For example, if you use a 10m² office in a 100m² house, that’s 10%. This means that we can then claim 10% of your household bills that relate to the running of your home.
A quick example
If your annual power bill is $3,000 and your office makes up 10% of your home, then $300 can be claimed as a business expense. The same applies to rates, insurance, and other eligible costs such as essential repairs and maintenance.
Worth noting
If you don’t have a dedicated office and instead work at the kitchen table or in a shared space, the calculations are not as straightforward. We need to take into account the time spent using that area for business versus personal use, which can make the claim smaller and more complex and it may be worth exploring the use of the IRD square metre rate.
Find out more
Everyone’s setup at home looks a little different, so if you’re not sure what you can or can’t claim, just reach out to us. We’re always happy to chat and help you work it out.
