Did you know if you own a rental property you can claim on a variety of expenses at tax return time? These expenses must relate to the costs of generating rental income, and must not include costs for private use. Now you must be wondering well what are these expenses? Below we’ve outlined the type of expenses you can claim and they are as follows taken directly from the New Zealand Inland Revenue Department:
Insurance and rates
You can claim the cost of insuring your rental property and the council rates in regards to the ownership for the property.
You can claim the interest charged on money you’ve borrowed to buy your rental property. However, if you borrowed part of the money for another purpose. Or topped up the mortgage for another purpose, for example to consolidate debt or to buy the house you live in, you can only claim the interest that relates directly to the rental.
Fees and commission
You can claim 100% of the fees or commission paid to your property manager/property management company who collect the rent, maintain your rental, or find tenants for you.
Fees paid to an accountant
You can claim the fees for:
- Your accounts to be managed
- Tax returns to be prepared
But you can’t claim the costs involved in setting up your rental property.
Repair and maintenance costs
You can claim the costs for any repairs to the property or general maintenance. However, if you’re doing the work yourself you can only claim for materials, not your time.
If the work is more of an improvement than a repair then you can’t claim the cost as an expense.
The distinction between repairs and improvements can be tricky. So if you’re unsure whether work done on your property is repairs or maintenance we suggest you talk to a tax agent.
- Other costs associated with managing a rental property you can claim include:
- Gifts for tenants
- Travel associated with managing you investment property
- Water rates (only if paid by the landlord)
- Body Corporate fees
- Valuation fees
- Legal fees, under $10,000 in any given year
So what can’t you claim? Simply put you can't claim deductions for capital expenses, private expenses, or expenses that do not relate to your rental.
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