We've noticed some taxpayers are incorrectly claiming rent or mortgage interest (and other occupancy expenses) as part of their work-from-home expenses.
Generally, employees aren't eligible to claim occupancy expenses. Employees who make a personal choice to work from home rather than working in the office aren't entitled to claim occupancy expenses, even if they live a long way from their employer's place of business.
Occupancy expenses include amounts taxpayers pay to own or rent their home.
If you have clients wanting to claim occupancy expenses, they must be able to demonstrate they incurred the expenses and all the following:
- the area of their home they used for work purposes is a 'place of business'
- it was necessary for them to work from home because their employer didn't provide an alternative 'place of business' to work from
- the nature of their income-earning activities requires them to have a 'place of business'.
The following factors may help determine if an area of your client's home is a 'place of business'. The area:
- is clearly identifiable as a 'place of business'
- isn’t readily capable of being used for any other purpose, that is, private or domestic use
- is exclusively or almost exclusively used for carrying on a business
- is used regularly for client or customer visits.
Clients who are eligible to claim occupancy expenses, such as rent or interest expenses paid on their home loan, can claim a portion of those expenses based on:
- the floor area of the part of the home used as a 'place of business' for work
- the period they worked from home
- their share of ownership of the property – for example, if the house is owned or rented jointly with others, your client can only claim their portion of the deductible interest expenses and other occupancy expenses.
Refer to the Decision impact statement for Commissioner of Taxation v Hall [2026] FCAFC 43 or Occupancy expenses to find out more detail about eligibility.