How to claim your home office expenses on your tax return

Written by Mark Chapman; H&R Block director and tax consultant.


Changing work patterns in recent years have seen many people increasingly working from home, rather than from a traditional office.

That might be by choice or it might not; such as working a weekend, from your home office, to finish a crucial report.

Either way, many people are spending more time and money establishing their home office to help them with their full-time work.

Get your tax return right and the claim your home office expenses

Get your tax return right, and claim the right things for your home office.

The good news is that much of the expenditure you incur is tax deductible.

Here’s my list of how to take advantage of things you can claim for your home office:

What can you claim?
The expenses that you can claim are:

• Heating, cooling and lighting;

• Decline in value (depreciation) of home office furniture and fittings;

• Decline in value of office equipment and technology (e.g. computers);

• Capital items such as furniture and computer equipment can be written-off immediately if the cost is less than $300;

• Computer consumables, stationery, telephone and internet costs.

Many people try to claim a percentage of rent or the interest on a mortgage if they’re using their home as a home office. This isn’t allowable.

Ideally, you should have a specific room set aside as a home office.

If you are using a room with a dual purpose (e.g. dining room), or a room shared with others (e.g. lounge room) you can only claim expenses for the hours you had exclusive use of the area.

So, how do you make your claim?
There are two methods:

The ATO’s rate-per-hour method

You can use a fixed rate of 45 cents-per-hour for home office expenses for heating, cooling, lighting and the decline in value of furniture.

You just need to keep a record of the number of hours you use the home office and multiply that by 45 cents per hour.

Log method/actual running expenses

Keep a log to work out how much of your running expenses relate to working in your home office.

The log needs to detail the time you spend in your office, compared with others using the office.

Keep your log record for a representative four-week period.

The ‘work-use proportion’ you calculate over that four-week period can then be applied to all your actual expenditure over the course of the year.

Keep a record of how often you use your home office

Log and calculate your use of your home office over a four-week period.

This method (compared to the rate-per-hour) usually produces the larger deduction, but the record-keeping requirements are more stringent.

Finally, a word of warning: It’s quite common for people to have insufficient documentation to support a home office claim, particularly around the proportionate split between business use and personal use.

Be sure to keep records so you can respond quickly and easily to an audit.

You’ll be glad you did when tax time comes around.