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.

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.