How to Claim Home Office Expenses in New Zealand (2026 Guide)

Quick answer

New Zealand gives self-employed people two methods for a home office: the square metre rate, which replaces utility bills with a flat rate per square metre and adds premises costs on top, and the proportional method, which apportions actual costs. This guide covers both with worked examples, the rules for employees, GST and records. Figures are from Inland Revenue in the Sources section, retrieved 10 October 2026.

The square metre rate

The square metre rate option is available if the business area is set aside and used mainly for business ^[1] . The rate is based on the average cost of utilities per square metre for an average New Zealand household: $57.30 for 2025-2026 and $55.60 for 2024-2025 ^{[1] [2]} . Inland Revenue sets it each year, so use the rate for the income year you’re claiming ^[2] . If you use this option, you can’t claim any other expenses or depreciation for business use of your home ^[1] .

Adding premises costs

Under the square metre option, premises costs are claimed with the formula (a × b) + (c × d) ^[1] :

• a is the total of mortgage interest, rates and rent paid;
• b is the business area divided by the home’s total floor area;
• c is the business area in square metres;
• d is the square metre rate.

Only the interest part of a mortgage is deductible, not the principal, and there is no GST on mortgage interest ^[1] .

Worked example: a consultant uses a 12 m² office in a 120 m² home for the 2025-26 year. Her mortgage interest and rates total $24,000. Premises: $24,000 × 12 ÷ 120 = $2,400. Utilities: 12 × $57.30 = $687.60. Total claim: $3,087.60.

The proportional method

Under the proportional method, household costs such as rates, insurance, power and mortgage interest are claimed for the part of the home used for business, apportioned by the time and space used for earning income ^[1] . For internet, you choose the business proportion as long as it gives a fair and reasonable result ^[1] . Business furniture and equipment are depreciated, and items under the $1,000 low-value threshold are deducted immediately, using the price less GST if you’re registered ^[3] . This method takes more records but can give a larger claim when power bills are high or there’s no area set aside.

Employees working from home

Employees can’t deduct work expenses against salary, so working from home is handled through reimbursement. Under Determination EE004, an employer can pay a home worker up to $27 a week as exempt income to cover extra household and telecommunications costs, or up to $20 a week plus up to 75% of their plan bill if it’s principally for work, or 25% if principally private ^[4] . Up to $400 of reimbursement for new furniture and other equipment can also be exempt, with a separate $400 for telecommunications equipment ^[4] .

GST

A GST-registered business claims GST on the business share of costs that include it, supported by taxable supply information over $200 ^[5] . Mortgage interest carries no GST ^[1] . The square metre rate is an income tax calculation, so a GST claim still has to come from actual invoices.

Records

Keep the floor plan or measurements behind the business area, the mortgage interest, rates and rent statements, and under the proportional method, every apportioned bill. The record-keeping guide covers the seven-year retention period.

Common mistakes

• Using last year’s square metre rate ^[2] .
• Claiming depreciation or other home costs on top of the square metre rate ^[1] .
• Including mortgage principal in premises costs ^[1] .
• Using the square metre rate without an area used mainly for business ^[1] .
• Claiming GST on the square metre rate or on mortgage interest ^[1] .

Software that helps

ExpenseFlow captures power, phone, internet and furniture invoices by email, upload or photo, codes each line with a tax code and a written reason, and can apply a fixed business-use percentage you configure per account. It syncs to Xero or QuickBooks Online after approval, so the records behind a proportional claim sit in one place. It doesn’t calculate the square metre rate claim.