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 power 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- power, gas, 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 - 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 a simple floor plan with the workspace marked is worth keeping - it ends that conversation quickly.

If the space isn't exclusively for work - say the dining table is your desk half the time - 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 workand enter the business share of its use, and every part of the claim scales accordingly - a 12 m² room used half for business claims what a dedicated 6 m² office would.

Using the helper

Choose Home officeon the Expenses tab. Pick the tax year and whether you rent or own, enter the two floor areas and the year's costs, and the breakdown updates live as you type. Saving records it as a Home office expense for that year, with the full working saved in the expense's notes so your accountant can verify the claim at a glance.

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 - no utility bills to keep. If your household running costs are unusually high, switch Utilities to actual costsand enter the year's power and gas total and your house and contents insurance; Coffer apportions them by floor area instead. Only one method can be used in a year, so the helper shows both methods' figures side by side - pick whichever gives you more.

One entry per year, carried forward

The deduction is a yearly figure. Coffer keeps a record per tax year and pre-fills the next year from the newest one, so the annual entry is a quick review rather than a re-measure. Saving again for the same year updates the existing entry instead of adding a second one.

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 lands after 31 March. Enter what you know now and re-save when the final figures arrive - the entry trues up.

What to keep

With the square-metre rate there are no utility bills to keep - the records that matter are your floor plan or measurements, and the rent or mortgage-interest and rates statements behind the premises part. With actual costs, keep the power, gas, and insurance bills too. Coffer's saved entry preserves the full calculation in its notes, but the source documents are yours to hold - 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.