Home Office Expense Share Calculator

Understanding the home office expense share — concept and principle

If you run a business or work self-employed from home, part of your housing costs may be a business expense. The most common way to find that part is the area method: the share of your home's floor area used as an office is applied to the costs of the whole home. This calculator gives that share and the matching amount of yearly costs. It works with square metres or square feet and with any currency, as long as each pair of inputs uses the same unit.

How it is calculated

• Share of home = office area ÷ total home area × 100
• Deductible share = office area ÷ total home area × yearly home costs

Yearly costs are what you enter: typically rent, or mortgage interest, plus utilities such as electricity, heating and water. Whether each cost may be included depends on your tax rules.

The principle

Most home costs serve the whole space at once. Heating, rent and insurance do not belong to any single room, so a fair way to split them is in proportion to the area each use occupies. If the office is one seventh of the floor area, it is treated as causing one seventh of those shared costs. The method assumes costs are spread evenly by area and that the office space is used for business, not shared with family life. Costs that belong only to the office, such as repairs inside it, are usually handled separately and in full, while costs that belong only to private rooms are excluded.

Worked example

1. Inputs: office 12, home 85 (same unit), yearly costs $18,000.
2. Share of home = 12 ÷ 85 = 0.14118, shown as 14.12%.
3. Deductible share = 0.14118 × 18,000 = 2,541.18, shown as $2,541.18.

How to read the result

The result is the amount that the area method assigns to the office, not a guaranteed deduction. Tax authorities set their own conditions. In the United States, for example, the IRS generally requires the space to be used regularly and exclusively for business, and it offers a simplified method of $5 per square foot for up to 300 square feet (a maximum of $1,500) as an alternative to actual costs. Other countries use different rules, fixed allowances or none at all.

Common mistakes

• Mixing square metres for one input and square feet for the other.
• Including mortgage principal repayments, which are not an expense.
• Counting a room that is also used as a guest room or for family life.
• Adding office-only costs to the shared total, which applies only a fraction of them.

Frequently asked questions

Can I count a desk in the corner of the living room?

Under rules that require exclusive use, such as the US rules, a shared area usually does not qualify. Some countries allow other methods, so check locally.

Should I use room count instead of area?

Some systems accept a room-based split when rooms are similar in size, but area is the more precise and widely used basis.

What if I own the home?

Owners usually count mortgage interest, property tax, insurance and utilities, and in some systems depreciation.

Sources: Internal Revenue Service, Publication 587 Business Use of Your Home