Most New Zealand businesses start at home, and many stay there permanently. It is cheap, flexible and entirely sensible — provided a few things are handled that people routinely skip.
What you can claim
Where part of your home is used for business, a proportion of household costs is deductible. The apportionment is generally based on the area used for business as a percentage of total floor area.
Costs that can be apportioned include rates, insurance, power, mortgage interest or rent, and repairs and maintenance relating to the whole property. Expenses relating solely to the business area are fully deductible.
Inland Revenue also publishes a square metre rate option, which simplifies the calculation by combining a set rate for utilities with the actual cost of premises-related expenses apportioned by area.
Keep it defensible: measure the area, keep the invoices, and be honest about the proportion. A room used exclusively for business is straightforward; a corner of the lounge used in the evenings is not the same thing.
Things people miss
- Telephone and internet apportioned to actual business use.
- Vehicle expenses, where working from home changes what counts as business travel — travel from a home office to a client can be business travel where the home is genuinely your base.
- Capital items such as fitting out a room, which are treated differently from running costs.
- The main home exclusion for the bright-line test, which can be affected where a significant proportion of the property is used for business. Worth checking before you sell.
Tell your insurer
A standard house and contents policy typically excludes business use. Business equipment may not be covered, business stock almost certainly is not, and a visitor injured on your property in connection with your business may not be covered by your home liability cover.
This is a cheap fix — either an endorsement to the house policy or a small business policy — and an expensive omission.
Check the council position
District plans generally permit a home occupation as a permitted activity, subject to conditions. Those conditions typically limit floor area, number of non-resident staff, signage, customer visits, traffic and noise.
Exceeding them makes the activity non-compliant and can require resource consent. The triggers most often crossed are customer visits, staff on site and vehicle movements.
If you are renting, check the tenancy agreement. Running a business from a residential tenancy may breach it, and body corporate rules in a unit title development frequently restrict business use.
Health and safety still applies
Your home is a workplace when you work there. For a solo desk-based business the obligations are modest but real — and if you have workers, including anyone visiting, you have duties toward them.
Where employees work from their own homes, the employer retains duties. Practical approach: a self-assessment checklist covering workstation setup, electrical safety and emergency arrangements, and a way for people to raise issues.
The signals that it is time to move out
- Customers or staff regularly on site, which usually breaches district plan conditions and strains domestic life.
- Stock volume exceeding what a garage can hold, or creating a fire or access hazard.
- You cannot hire, because candidates will not work in someone’s house.
- Work has stopped ending. The absence of a boundary is the most commonly cited reason people move out, and it is a genuine wellbeing issue rather than a soft one.
- Insurance or compliance has become awkward to arrange.
The intermediate options
Moving out is not binary. Coworking space, a small serviced office, shared warehousing or third-party logistics, and hiring meeting rooms as needed all cover specific gaps without a lease commitment.
For businesses whose only real problem is stock, a 3PL arrangement solves it without premises at all.
Inland Revenue publishes home office expense guidance including the square metre rate, and your territorial authority publishes its district plan home occupation rules. Both free.
General information only, not tax advice.
