The home office deduction

If you work from home, part of what your home costs you is a business expense: the share of rent or mortgage interest for the space you work in, and a share of the running costs like electricity, other utilities, and insurance. It's one of the most-missed deductions because the apportionment maths puts people off. Coffer computes it for you and records the result as a normal expense for the year.

How the deduction works

The claim has two parts, and Coffer adds them together:

• Your office's share of the premises costs. Rent if you rent; mortgage interest (never principal) plus council rates if you own. The share is by floor area: a 12 m² office in a 100 m² home claims 12% of those costs.
• The running costs, which are electricity, other utilities, and house and contents insurance. By default Coffer uses IRD's square-metre rate: a set dollar amount per square metre of office space per year ($57.30 for the 2025/26 year), which covers those costs with no receipts needed.

Worked example, renting: a 100 m² home with a 12 m² office and $26,000 of rent for the year claims 12 × $57.30 = $687.60 for running costs, plus 12% of the rent = $3,120.00, which is a deduction of $3,807.60 for the year.

What counts as your workspace

Measure the area genuinely used for the business: the office itself, plus any space given over to business storage (stock, equipment, archived records). Leave out bathrooms, kitchens, hallways, and the garage unless clients actually use them as part of dealing with you. The floor-area percentage is the number a review tests first, so it's worth keeping a simple floor plan with the workspace marked, which answers that question quickly.

If the space isn't exclusively for work, for example the dining table is your desk half the time, then the fair claim is the floor share scaled by how much of that space's use is business. The helper handles this. Turn off This space is used only for work and enter the business share of its use, and every part of the claim scales accordingly, so a 12 m² room used half for business claims what a dedicated 6 m² office would.

Using the helper

Open Expenses and choose the Home office section. The page keeps each tax year's workspace setup, household costs, and calculated claim together. Choose Add setup, then save whether you rent or own, the floor areas, how the space is used, and the utility-cost method. You can save this before you have any bills. Use Add household cost, or choose the Home office category while adding an expense, to record each rent, mortgage-interest, council-rates, electricity, other-utility, or home-insurance payment as it occurs. Coffer keeps those source records visible and updates the single calculated claim automatically.

Square-metre rate or actual costs

The square-metre rate is the default because for most home offices it's both the bigger claim and the easier one, since there are no utility bills to keep. If your household running costs are unusually high, switch Utilities to actual costs and record each electricity, other-utility, and house-insurance bill under Expenses. If you own the home, council rates are recorded the same way under either method because the square-metre rate does not include rates. Coffer retains each supplier, date, amount, receipt, and exact GST shown, then apportions the costs by the saved business share of the home. If the square-metre method is selected, Coffer warns you and prevents utility or insurance bills from being included again.

One entry per year, carried forward

The deduction is a yearly figure. Coffer keeps one setup per tax year and pre-fills the next year from the newest one, so the annual setup is a quick review rather than a re-measure. Saving again for the same year updates it. Costs are dated expense records, so Coffer assigns each payment to the correct tax year and recalculates that year's claim whenever a source record changes.

Two things arrive late for the current year, and the helper says so while you're in it: IRD publishes each year's square-metre rate after the year ends (Coffer uses the latest published rate as an estimate and labels it), and if you own, your bank's annual statement with the year's interest total arrives after 31 March. Enter what you know now and re-save when the final figures arrive, and the entry updates to match.

What to keep

With the square-metre rate there are no electricity, other-utility, or home-insurance bills to enter for the claim. The records that matter are your floor plan or measurements, and the rent or mortgage-interest and rates records behind the premises part. With actual costs, enter the utility and insurance bills too. The Home office page gives your accountant the bill-by-bill schedule they need to check suppliers, dates, amounts, and GST. Attach the source documents to those expense rows; IRD expects business records to be kept for seven years.

See also

The wider picture of recording costs, receipts, and the deductions tracker is in Recording expenses. For the tax rules behind the two methods, including how to choose and what an audit looks at, see the guide Home office deductions: the two methods. When it's time to put the year's claim into your tax return, the guide Filing your first IR3 walks through where expenses land.