What expense deductions can I claim against my property?
Deductibility Rules
Whether you can claim an expense depends on it being linked to generating rental income.
For example, subscription fees related to myRent is deductible as the services and resources available are directly associated with managing your investment properties.
Motor vehicles
You can claim IRD-prescribed kilometre rates when visiting your rental property to do things like inspections. Just be sure to keep a vehicle logbook.
Low Value Assets
Any assets under $1,000 can be expensed if on a separate invoice.
Repairs and Maintenance
For any spending over $1,000, your Accountant should check whether the cost is actually a capital asset or an improvement.
Interest on Loans
If borrowing money, it’s the purpose of the loan that determines deductibility.
For example, if you borrow $500k to buy a rental property the interest will be deductible (subject to general interest deductibility rules). But if you borrowed $500k for a Ferrari or personal asset purchase, the interest is generally not deductible.
Talk to your Accountant before borrowing or restructuring. Doing things correctly at the start can reduce future costs and help ensure optimal tax deductibility under IRD rules.
Why chattel valuations matter
A chattel valuation helps you split out the value of items like carpets, appliances, and curtains from the building when purchasing a property.
These items can be depreciated, giving you a tax advantage
In many cases, the cost of the valuation is recovered in the first year through depreciation claims.
Valuit is a good option for chattel valuations. Fill out a simple form on our website to book a chattels valuation
Important: You must do a chattel valuation before your tax return is due for that property.
We’ll be sharing more valuable insights from Shortland Chartered Accountants in our next article — including tax rules like ring-fencing and Brightline
In the meantime, if you need help with your tax return or have a question about accounting or property tax, book a free consultation with Shortland Chartered Accountants here.
This article is for general information only. You should always seek personalised, professional advice before acting on any of the material.
