How to Claim Working-from-Home Expenses in NZ (2026)

If you work from home, as a self-employed contractor, sole trader, OR a salaried employee with a side gig, you can claim a portion of your home running costs as a tax deduction.

For most Kiwis this is a few hundred to a few thousand dollars off their tax bill each year. Almost everyone qualifies. Almost nobody claims.

Who can claim

• Self-employed / sole traders / contractors: Yes, full claim available.
• Salaried employees with side income: Yes, against the side income only.
• Rental property owners: Yes, against rental income only (limited).
• Pure PAYE employees with no side income: No. Working from home for your salaried job doesn't qualify unless you're self-employed.

The two methods IRD allows

Method 1: Actual costs (best for most)

Calculate the % of your home used for business, then claim that % of your running costs:

• Calculate the work-from-home %: floor area of your dedicated workspace ÷ total floor area.
  • Example: 12m² home office ÷ 120m² house = 10%.
• Apply that % to:
  • Power
  • Internet (most NZ households can claim 100% if dedicated work line, otherwise the WFH %)
  • Insurance (contents and house)
  • Rates
  • Mortgage interest (NOT principal)
  • Cleaning costs

For a $120k house with $3k/year power, $1.5k internet, $4k rates, $2.5k insurance, $20k mortgage interest = $31k of household running costs. At 10% WFH = $3,100 deductible.

Method 2: IRD's square-metre rate (simple)

If you don't want to track everything, IRD lets you claim a flat $0.95 per m² of dedicated workspace, per work-from-home day.

12m² × $0.95 × 220 work-from-home days = $2,508.

Plus the standard ~$0.10/m²/day for utilities, gives ~$2,772.

Less paperwork. Slightly lower number for most setups.

What counts as a "dedicated workspace"

The room or area must be regularly used for business, not just the dining table you sometimes work at. A spare bedroom used as an office: yes. The corner of the lounge you use Tuesdays: harder to justify.

You don't need a fully separate room. A clearly defined work zone is OK.

What you can't claim

• The full mortgage payment (only the interest portion, and only the WFH %).
• Improvements to the home that aren't directly business (kitchen renos, etc).
• Childcare costs.
• Coffee, lunches, snacks while working at home.

Documentation IRD wants

• Photo of the workspace.
• Calculation showing floor area.
• Bills/statements to substantiate the actual costs (Method 1).
• A simple log of work-from-home days (Method 2).

Keep records for 7 years.

Submitting in your IR3

In myIR, file an IR3 (Individual Income Tax Return). Under Section 9 (expenses), add the WFH total under "Use of home for business". myIR doesn't break it down, you just enter the dollar amount and keep the calculation in case of audit.

Worked example: contractor

Sarah is a freelance designer, $80k self-employed income, works from home full-time, 12m² dedicated office in a 120m² rented apartment.

• Rent $30k/year × 10% = $3,000.
• Power $1,800/year × 10% = $180.
• Internet $1,200/year (claims 50% personal use) = $600.
• Contents insurance $400/year × 10% = $40.
• Total WFH deduction: $3,820.

At a 33% marginal tax rate, that's $1,260 saved on her tax bill.

Can I claim working from home if I am a salaried employee?

No, not against your salary. This is the answer most people are looking for and it is the disappointing one.

PAYE already accounts for the cost of earning your salary, so an employee working from home for their employer has nothing to deduct. If your employer wants to cover the cost, they can pay you an allowance, and that is between you and them.

The moment you have self-employed or contracting income, the picture changes. You can then claim against that income, in proportion to the work you do at home for it.

Should I use actual costs or the square metre rate?

Actual costs usually give the bigger number. The square metre rate usually gives the easier year.

If your workspace is a decent share of the floor area, the actual-cost method captures rent or mortgage interest. That is the largest line by a distance. It also means keeping every bill.

The flat rate exists for people whose workspace is small or whose paperwork discipline is realistic. A claim you actually make beats a larger one you never get around to.

Do I need a separate room?

No, but you do need a space that is genuinely and regularly used for work.

A spare bedroom set up as an office is straightforward. A defined corner with a desk in it is defensible. The dining table you sometimes sit at is not, because the same area is doing both jobs and there is nothing to measure.

Measure the area you claim, photograph it, and write down how you arrived at the percentage. That file is the whole defence.

How long do I have to keep the records?

Seven years, which is the standard IRD retention period for anything supporting a return.

That means the floor plan or measurement, the bills behind the actual-cost method, or the log of days behind the flat rate. Digital copies are fine.

The photo is the cheap insurance. Reconstructing a workspace from memory three years later is where otherwise valid claims fall over.

Where Steady fits

Tag a "Home office" category in Steady covering the relevant bills. At tax time, export the year's spending in that category, straight into your IR3.

Disclaimer: General education only. Tax positions vary; ask a chartered accountant if you're unsure.