Working from home costs money, and in many tax systems part of that cost can be deducted from business income. The logic is fair: if a room in your home exists to earn your living, the share of rent, utilities, and insurance that belongs to that room is a business cost. This estimator compares the two usual ways of working out that share, so you can see which method gives the larger figure for your situation.
The actual method works from real costs. Divide your office area by your whole home area to find the office share, then apply that share to your annual home costs. An office of 120 square feet in a home of 1200 square feet is ten percent, so ten percent of annual costs of 18000 gives a deduction of 1800. The method is accurate, but it needs real records: bills, rent or mortgage statements, and insurance documents for the whole year.
The simplified method works from area alone. Multiply your office area by a per-square-foot rate, up to a maximum area counted. With an office of 120 square feet, a rate of 5, and a cap of 300, the estimate is 600. No bills are needed, which makes the method quick and easy to defend, but the result is often smaller than the actual method for people with high housing costs. Enter your own rate and cap, because both vary by country and year.
Here the comparison is clear: the actual method gives 1800 and the simplified method gives 600, so the actual method is larger by 1200. That gap is typical when housing costs are high and the office is a reasonable share of the home. When housing costs are low, or the office is very small, the simplified method can win instead, and its simplicity may be worth a small difference. Run both methods every year, because the winner can change when you move, renovate, or change your costs.
Qualifying is the part many people skip, and it matters more than the arithmetic. Many systems require the space to be used exclusively and regularly for business, which a spare bedroom used only as an office may satisfy, while a kitchen table used for work and family meals usually does not. Some systems have extra tests for employees, for rented homes, or for mixed-use rooms. This tool estimates amounts only; it cannot tell you whether you qualify, and claiming a deduction you do not qualify for can create penalties.
Records decide whether a deduction survives a check. For the actual method, keep a full year of bills and a note of how you measured both areas, with a sketch or photo of the office if you can. For the simplified method, keep the measurement and the rate source. In both cases, keep the records for as long as your tax authority requires, which is often several years after filing. A deduction with records is a routine matter; a deduction without them is an argument.
Area measurement deserves care, because small errors change the result. Measure the office room itself, not the whole floor or the whole flat, and measure the whole home on the same basis. A room of 120 square feet claimed as 200 square feet overstates the deduction by two-thirds, which a checker will notice. If your office shares a room with other uses, measure honestly and check whether your rules allow a partial claim at all.
Use this estimator when you set up a home office, when you move, and at tax time each year. Compare both methods, keep the records for the method you choose, and confirm your eligibility with current guidance or a qualified professional before you claim. This is an educational estimator only, never tax or professional advice. A home office deduction done properly is real money back; done carelessly, it is a risk you did not need.