Expenses related to your home work area
If you operate your business in full or in part from home, you may be able to claim a deduction for:
- occupancy expenses, such as rent, mortgage interest, rates, land taxes and house insurance premiums
- running expenses, such as phone rental and business calls, internet fees, depreciation of office furniture and equipment, and any additional heating, cooling, lighting and cleaning expenses.
Whether you can claim both running expenses and occupancy expenses depends on whether:
- your home is your place of business and you have an area set aside exclusively for business activities
- your home is not your place of business, but you have an area set aside exclusively for business activities
- you work at home, but have no home work area - that is, you work when others are not present in a living area or garage, but your home is not your place of business and you don't have an area set aside primarily or exclusively for business activities.
If your home is your place of business and you have an area set aside exclusively for business activities, you may be able to claim both running and occupancy expenses.
If you carry on your business elsewhere and also do some work at home, you cannot claim occupancy expenses even if you have a home work area set aside.
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Before claiming expenses relating to your home work area, we recommend you read Home-based business.
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The following table shows the deductions you can claim for the three ways you can work at home.
What you can claim
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How you operate your business
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Home is your place of business and you have a home work area
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Home is not your place of business but you have a home work area
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You work at home but don't have a home work area
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Occupancy expenses
Cost of owning or renting the house (such as rent, mortgage interest, insurance and rates)
If your income includes personal services income (see below), you may not be able to claim a deduction for occupancy expenses.
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Yes
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No
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No
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Running expenses
Cost of using a room (such as gas and electricity)
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Yes
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Yes
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Yes
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Business phone costs
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Yes
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Yes
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Yes
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Decline in value of office plant and equipment (such as desks, chairs and computers)
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Yes
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Yes
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Yes
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Depreciation of curtains, carpets, light fittings, etc.
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Yes
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Yes
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No
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You can keep a diary to work out how much of your running expenses relate to working at home. All you have to do to support your claims is keep a diary for a representative period of about four weeks each income year.
Alternatively, for home work area expenses, such as heating, cooling, lighting and depreciation of furniture, you can claim a fixed rate, instead of keeping details of actual expenses.
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Effective from 1 July 2010, the hourly rate for home office expenses increased from 26 cents to 34 cents an hour.
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We have developed an online tool to help you determine whether you are entitled to occupancy expenses and then calculate your allowable deduction - refer to Home office expenses calculator.
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For more information on home office expenses, refer to:
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If your home is your place of business, capital gains tax may apply when you sell your home.
Last Modified: Friday, 29 June 2012