Your home is the principal place of business

This means that you run your business from home and an area of the home is set aside exclusively for these business activities. Common examples include:

• a small business operator whose main office is in their home
• a tradesperson or craftsperson who has their workshop at home
• a doctor or dentist who has their surgery or consulting room at home.

You can claim a deduction for the following:

• The cost of using a room's utilities, such as gas and electricity.
• These must be apportioned. If the business portion is based on anything other than the floor area (for example, on actual electricity usage) you must clearly document your claim.
• Business phone costs.
• If a telephone is used exclusively for business you can claim for the rental and calls, but not the installation costs. If the telephone is used for both business and private calls you can claim a deduction for business calls.
• Decline in value of office plant and equipment (for example, desks, chairs, computers).
• If the equipment (such as a computer) is also used for non-business purposes, your claim must be apportioned.
• Decline in value of curtains, carpets and light fittings.
• Cost of owning or renting the house (such as rent, mortgage interest, insurance, rates).
• You can claim the portion of these costs that relates to the room or workshop you use as a place of business. A common method of working out how much to claim is the floor area (as a proportion of the floor area in your whole home).

If your income includes personal services income, you may not be able to claim a deduction for occupancy expenses.

Capital gains tax

If your home is a place of business there may be capital gains tax implications when you come to sell your home.

What to read/do next

• Guide to capital gains tax
• You have a home work area
• You work at home but do not have a home work area
• Home-based work essentials
• Business deductions essentials