Tax Tips: Home Office Expenses

Do you carry out part or all of your work from a home office? If you do, then you may be entitled to claim office expenses associated with running your business from home.

Home office expenses can be classified into two broad categories which we look at in more detail below: 

What are home office expenses?

1.  Running Expenses: You may be entitled to claim a deduction for the running expenses of your office comprising:

• Electricity
• Gas
• Depreciation of office furniture

You can claim running expenses in two ways; the amount of actual expense incurred or 26 cents per hour. You can’t claim a deduction for running expenses if there is no additional cost incurred. For example if you conduct your work in the living room of your home where other people watch the television.

1. Occupancy expenses: These are expenses which relate to owning or using your home as a place of business. This means that if you run your own business from home you can often claim a percentage of total home expense based on the floor area of the office. These expenses can include:

• Rent
• Mortgage
• Water rates
• Repairs
• House insurance 

Diary records noting the time that the home office was used for work is acceptable evidence and should be kept for at least four weeks.

Important note:

Please be aware that if you are able to claim these expenses, it may affect your ability claim a “main residence exemption” for capital gains tax purposes. This could leave you having to pay capital gains tax on your family home.