You usually calculate occupancy expenses based on the proportion of the floor area of your home that is a place of business and the proportion of the year it was used for business. 

A common method of working out how much to claim is to work out the floor area you use for your business as a percentage of the total floor area of your whole home. For example, if the floor area of your home office is 10% of the total area of your home, you can claim 10% of your rent or mortgage interest, council rates and insurance.

In some circumstances, you may not be able to work out the floor area of your home that is used for your business. The ATO will accept an alternative method of working out how much of your home you use for business purposes, as long as the method you use is reasonable and based on accurate information.

Make sure you keep accurate records of how you worked out the occupancy expenses you claim as deductions.

If you’re a sole trader with simple tax affairs, you can use the myDeductions tool in the ATO app to record your expenses.

How to calculate your claims

Occupancy expenses will be apportioned based on the floor area of the home used for the income earning activity as follows. 

(Floor area for business use divided by Total floor area of home) x Relevant expenditure

Example:

The annual mortgage interest expense of your home is $12,000.

(Floor area for business use divided by Total floor area of home) x Relevant expenditure

(10m2 / 560m2) x $12,000

= $214

You can claim $214 as the business portion of your annual mortgage interest expense.