As to "Whats constitutes a home office being a business office?"
The answer is in two parts ... firstly it has to be "the" place of business and not merely a study where you bring work home from the "real" office and secondly, it needs to have the character of a place of business and not be readily adaptable for private use.
Furthermore, the discussion tangents so I take the opportunity to address certain misconceptions apparent.
A place of business in a home may have its associated "Occupancy Expenses" claimed. These are inherent to the property regardless of any business operation so let's be clear that things like electricity are NOT occupancy expenses but rather RUNNING expenses i.e the additional costs of running the business. Occupancy expenses are mortgage interest or rent, council and water rates and building insurance and for my clients, building depreciation as well.
The most common method of apportionment is floor space but time is also easily enough calculated under the right circumstances.
As to CGT consequences, these will apply regardless of what you do or don't claim - just google "interest deductibility test" (it's an ATO thing) to see what I mean.
Best of luck and if you need further info or assistance, please feel free to contact me.
Regards
Frank
http://www.deductyourhome.com.au