Examples where your home is considered a place of business include:
a small business operator whose main office is in their home
a tradesperson or craftsperson who has their workshop at home
a doctor or dentist who has their surgery or consulting room at home.
If your home is not your primary place of business but you do some work from home, you may still be able to claim some deductions. See Working from home.
TR 93/30Income tax: deductions for home office expenses
Deductions you can claim
If you incur expenses from running your business from home, you can only claim deductions for the business part of the expense. You can't claim deductions for private costs.
For example, if you make both business and personal calls from your phone, you can only claim a deduction for calls that relate to your work.
Expenses you can claim a deduction for include:
Occupancy expenses are the expenses that you pay to own or rent your home – these include rent, mortgage interest, water rates, land taxes and house insurance premiums
Running expenses are the increased costs from using your home facilities for your business – these include electricity charges for heating and cooling, lighting, cleaning costs, decline in value and the cost of repairs on deprecating assets such as furniture, furnishings and equipment
Phone and internet expenses including the decline in value of the handset.
To make it easier for people to claim deductions for working from home due to COVID-19, we are accepting a temporary shortcut method for calculating home office expenses from 1 March 2020 until 30 September 2020. This allows you to claim a rate of 80 cents per hour for all additional running expenses.
If you earn personal services income (PSI), you may not be able to claim a deduction for occupancy expenses (for example, rent or mortgage interest).
Capital gains tax and the main residence exemption
A person's home is normally exempt from capital gains tax when they sell it, under the 'main residence exemption'.
However, if your home is your primary place of business you may only be entitled to a partial exemption.
It's a good idea to get a valuation of your home when you first begin to use it as your place of business. This will help with calculating the capital gain or capital loss when you sell it, so you don't pay more capital gains tax than necessary.