IRD Home Office Rate: Claiming Home Office Expenses in NZ

Short answer: Inland Revenue’s square metre rate for home office expenses is $57.30 for the 2026 tax year (1 April 2025 – 31 March 2026), up from $55.60 the year before. You multiply it by the square metres of your home set aside and mainly used for business, then add the same floor-area percentage of your mortgage interest, rates and rent. The alternative is the actual cost method: the business percentage of your real household bills. The rate for the 2027 tax year has not been published yet.

This guide is for self-employed people and sole traders who work from home, and follows Inland Revenue’s home office expenses guidance. Home office is one line in a wider set of claims: self-employed expenses and receipts covers the rest, and the IR3 explained shows where your business expenses end up.

What is the IRD home office rate?

The IRD home office rate is a set dollar amount per square metre that stands in for the running costs of the part of your home you use for business. Inland Revenue sets it each year from Statistics New Zealand data: the average annual cost of utilities for an average New Zealand household, divided by the average house size, then adjusted for the Consumers Price Index.

Tax year	Square metre rate
2026 tax year (1 Apr 2025 – 31 Mar 2026)	$57.30
2025 tax year (1 Apr 2024 – 31 Mar 2025)	$55.60
2024 tax year (1 Apr 2023 – 31 Mar 2024)	$53.10

The $57.30 figure is from Inland Revenue’s square metre rate for home office calculations 2026 announcement; earlier rates are on Inland Revenue’s Tax Technical square metre rates overview. The rate is published after the tax year ends, so the figure for the 2027 tax year (1 April 2026 – 31 March 2027) isn’t available yet. Use the rate for the year you are claiming, not last year’s.

The rate covers utilities, which Inland Revenue’s operational statement OS 19/03 limits to gas and electricity, telephone, mobile and internet services, and house and contents insurance. Inland Revenue doesn’t say you can claim phone or internet on top of the rate, so if you use it, don’t add them. It does not cover premises costs, meaning mortgage interest, rates and rent. Those you claim separately, as a share of the actual amounts.

Who can claim home office expenses?

You can claim if part of your home is used to earn your business income. Inland Revenue says there must be a connection between the use of your home and the income being earned, and you need to be able to show how you worked out the amount.

For the square metre rate, the space must be separately identifiable and used mainly for business: a room or area set aside as your office or workshop. A desk in the corner of the lounge that the family also uses doesn’t qualify for the rate. For mixed-use space, Inland Revenue expects a fair and reasonable split, usually by floor area first and then by the time the area is used for business.

How do I calculate home office expenses with the square metre rate?

Inland Revenue’s formula is (a × b) + (c × d):

• a = your total mortgage interest, rates and rent for the year
• b = your business area divided by your home’s total floor area
• c = the square metres used mainly for business
• d = the square metre rate for that year

The first half covers premises costs at their real amounts; the second half replaces your utility bills with the rate.

Example (renting). You rent a 70 m² flat for $520 a week ($27,040 a year) and use a 7 m² room as your office. That’s 10% of the floor area.

• Premises: $27,040 × 10% = $2,704.00
• Rate: 7 × $57.30 = $401.10
• Home office claim for the 2026 tax year: $3,105.10

If you use the square metre rate, you can’t claim any other costs or depreciation for the business use of your home on top, such as your power bill or insurance.

What is the actual cost method?

The actual cost method, sometimes called the proportional method, applies your business percentage to your real household bills instead of using the rate. Inland Revenue’s example: if a 6 m² office is in a 100 m² house, you can claim 6% of rent, power, house insurance, mortgage interest, rates and contents insurance.

Phone and internet are worked out separately under this method:

• Landline: 50% of the rental if it is also your private line, plus 100% of business toll calls.
• Separate business line: the full cost, for both income tax and GST.
• Internet: the business share of a shared plan. You decide how to work it out, but the result must be fair and reasonable.

If there is a more accurate basis than floor area for a particular cost, such as a separately metered workshop, Inland Revenue lets you use that instead.

Worked example: which method gives the bigger claim?

The two methods share the premises half, so the comparison comes down to the rate against your actual running costs.

Assume you own a 160 m² home with a 16 m² office (10%), you are not registered for GST, and over the year you pay mortgage interest of $20,000, rates of $3,800, power and gas of $3,200, house and contents insurance of $2,600, and internet of $1,080, which you work out is used about 40% for business.

	Square metre rate	Actual cost
Mortgage interest and rates: $23,800 × 10%	$2,380.00	$2,380.00
Rate: 16 m² × $57.30	$916.80	—
Power, gas and insurance: $5,800 × 10%	—	$580.00
Internet: $1,080 × 40%	—	$432.00
Total claim (2026 tax year)	$3,296.80	$3,392.00

Here the actual cost method comes out $95.20 ahead, but only because of the internet claim, which you would need to justify. Without it, the rate wins by more than $300. As a rule of thumb, the rate tends to win in a home with modest power and insurance bills, and actual costs can win where power, insurance and internet bills are high for the size of the home, or where phone and internet are mostly business.

The square metre rate also needs less paperwork: one measurement and your interest, rates or rent statements, instead of a year of power and insurance bills. If the totals are close, simplicity is worth something.

Can I claim GST on home office costs?

Yes, if you are registered for GST, but only on costs that include GST. You can claim a share of the GST on rates, insurance and power. You can’t claim GST on rent or mortgage interest, because they are exempt supplies, and Inland Revenue says to leave them out of your GST return.

If you are registered, your income tax claim uses GST-exclusive amounts where GST applies, because the GST comes back through your GST return. If you are not registered, use the GST-inclusive amounts you actually paid. Claiming GST on business expenses has a worked home office example.

What records do I need for a home office claim?

Keep enough to show how you worked out the figure:

• Measurements: the total floor area of your home and the area used for business, ideally with a simple sketch.
• Premises costs: your mortgage interest statement, rates notices and rent records for the year.
• Running costs, for the actual cost method: power, gas, insurance, phone and internet bills.
• Your basis for any mixed use: for example, a note of the hours a room is used for business, or how you worked out your internet percentage.

Inland Revenue’s record keeping rules require you to keep records for at least 7 years. Measure once, keep the measurement, and re-measure only if you move or change how the space is used.

Keeping the year’s records together, and where does Keel fit?

A home office claim is one figure at the end of the year, but it rests on bills that arrive all year. The rest of your expenses work the same way.

Keel: Invoice Maker & Receipts, an iPhone app by Ilura Technology OÜ, keeps those records for you. You capture receipts and expenses, log business mileage, and send quotes and PDF invoices, with each item kept under its job and customer. “Who owes you” shows unpaid invoices and prepares reminder drafts that you review and send yourself; nothing is sent automatically. Records stay on your iPhone, with no account, no bank connection and no cloud sync, and the App Store privacy label reads “Data Not Collected”.

Keel doesn’t calculate your home office claim, choose a method for you, file your IR3 or connect to Inland Revenue. It is free with no invoice limit (free invoices carry a small “Made with Keel” footer), and Keel Lifetime is a one-time purchase of $249.99 USD (the App Store shows your local price) that adds custom branding, signature, premium templates and accountant-ready exports and reports. Keel on the App Store. More guides are on the New Zealand hub.

Frequently asked questions

What is the IRD home office rate for 2026? The square metre rate is $57.30 for the 2026 tax year, 1 April 2025 to 31 March 2026. It was $55.60 for the 2025 tax year. Multiply the rate by the square metres you use mainly for business, then add the same floor-area share of your mortgage interest, rates and rent.

What is the home office rate for the 2027 tax year? It hasn’t been published yet. Inland Revenue sets the rate after each tax year ends, adjusting it for the Consumers Price Index, so the figure for 1 April 2026 to 31 March 2027 will come out after 31 March 2027. Don’t reuse an earlier year’s rate for that year.

Can I claim my power bill as well as the square metre rate? No. The rate already stands in for utilities, which include power and gas, phone and internet services, and house and contents insurance. If you would rather claim your actual power bill, use the actual cost method for the whole claim instead.

Can I claim mortgage interest for a home office? Yes, for income tax: claim the business floor-area percentage of your mortgage interest under either method. You can’t claim GST on it, because mortgage interest is an exempt financial service, so it stays out of your GST return.

Can I claim a home office if I rent? Yes. Rent counts as a premises cost, so you claim your business floor-area percentage of it, plus either the square metre rate or a share of your actual running costs. A 7 m² office in a 70 m² flat lets you claim 10% of the rent.

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This article is general information, not tax advice. Consult a qualified New Zealand tax professional.