Is rent tax deductible?
It depends. Rent can be deductible for business premises, or partially deductible when you have a qualifying home office. Personal living rent is not deductible on its own.
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On this page: Short answer · Who this applies to · When rent is deductible · When rent is not deductible · Example · Records · Related · FAQ
Short answer
Depends. Rent may be tax deductible when it’s paid for business premises, or when you allocate a portion of rent to a qualifying home office (subject to current rules).
Personal living rent is not deductible by itself.
Who this typically applies to
- Small business owners renting a commercial space (office, studio, shop, warehouse)
- Self-employed / freelancers with a qualifying home office who allocate rent
- Contractors running a business from home and claiming a home office share
Employees working from home may be limited depending on current rules and reimbursements.
When rent is more likely deductible
- You rent a separate business location used for business operations
- You have a qualifying home office and allocate a reasonable portion of rent (often by square footage)
- The rent is an ordinary and necessary cost of your business
- You keep copies of the lease and proof of payments
When rent is not deductible (or risky)
- Personal rent for living expenses (no business allocation)
- Claiming a home office share without a clearly defined business space
- Using the “home office” area heavily for personal purposes (mixed-use without support)
- Double-counting rent that was reimbursed by an employer or client
Example: allocating rent for a home office
If you have a qualifying home office, you may allocate rent using a reasonable method (often based on square footage).
Example
- Monthly rent: $2,000
- Home size: 1,000 sq ft
- Dedicated office: 100 sq ft (10%)
- Potential rent share: $200/month (subject to current rules)
Keep your measurement method consistent and document the business use of the space.
What records to keep
- Lease agreement (and any amendments)
- Proof of rent payments (bank records, receipts)
- Home office documentation (photos/notes, square footage calculation, business-use explanation)
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If you allocate rent and other home office costs, using accounting software like Xero can help track categories and store supporting documents.
FAQ
Is rent tax deductible?
It depends. Rent may be deductible for business premises, or partially deductible when you allocate a portion to a qualifying home office, subject to current rules.
Can I deduct rent if I work from home?
Sometimes. If you have a qualifying home office, you may be able to deduct a portion of rent based on a reasonable allocation method.
Is personal rent deductible?
No. Personal living rent is not deductible by itself. Only the business-use portion may qualify under certain circumstances.
Looking for other deductible expenses? See the full Expense Deductibility Guide.
Last reviewed: January 2026