Rental Property & Investment Accounting - Devine Accounting Hamilton Accountants

Complete Rental Property Tax Accounting Services & Ongoing Support

Accurate efficient accounting, timely tax compliance, effective tax minimisation from a helpful professional team providing fabulous client service.

We will help you plan property purchases by giving you advice on potential rental returns, profit forecasts, and budgets.

In addition - we will complete individual income tax returns, trading trust returns as well as self-employed and company accounting and tax returns.

Rental Property Services:

Accounting Advice on purchasing a property
Reviews of lease agreements
Guidance on tax minimisation
Periodic reviews to ensure returns are maximised
Advice on ownership structuring & restructuring
Income Tax Returns
Financial Forecasts & Budgetting
Annual Financial Statements
Tax Reminder Notices
Tax planning advice
Non-Resident Tax Returns
Correct IRD Compliance

What you can and cannot claim on your rental property tax returns

Expenses that can be deducted from rental income

You are entitled to deduct the following expenses from a rental property tax return:

Legal fees for arranging finance to buy the property
Legal fees for buying & selling a property, provided the total legal expenses equal or are less than NZD $10,000
Interest payments & loan fees on money borrowed to finance your property
Mortgage repayment insurance
Accounting fees
Agents' fees & commission relating to the rental of the property
Advertising for tenants
Depreciation of white ware & furniture
Rates and insurance
General repairs and maintenance
Property inspection travel costs
Vehicle and travel expenses
Maintenance, repairs, gardening & pest control

Expenses that can't be deducted from rental income

The following expenses cannot be deducted from a rental property tax return:

Rental property purchase price
Real estate agent's fees incurred as part of buying or selling the property
The capital part of any mortgage repayment / repayments
Interest on money borrowed for another purpose besides financing of the rental property, even if you use the rental property to secure such a loan
Capital improvement costs - any repairs and maintenance that surpass replacement and improve your property
Private expenses - you cannot claim private expenses because these expenses don't produce taxable income and are for your own benefit.

Rental Property Tax Facts

GST on Residential Accommodation

Supplying residential accommodation in a dwelling is exempt from GST. However, accommodation in an commercial residential dwelling such as a boarding house may include GST.

GST on Boarding House Operations

If you operate a boarding house, the GST on the accommodation is calculated in two different ways:

For the first 4 weeks, charge GST on the full value of accommodation
After 4 weeks, charge GST only on 60% of the value of the domestic goods or services

4 Week rule for boarding houses
If at the begining of the stay, there is an agreement that the stay will be for more than 4 weeks, GST must be charged on 60% of the value of domestic goods or services from the start, not after 4 weeks.

International Properties

If you’re a New Zealand tax resident your total income includes any rental income from properties and other sources in other countries. You will be able to claim deductions for expenses that relate to the rental income received in other countries and you may also be able to claim a credit for any tax paid in other countries on the rental income received.

Income from renting out properties in other countries, and other sources, is liable for income tax in New Zealand; therefore New Zealand tax residents must include this income in their tax return. This includes income from renting out land or buildings or income earned from having private boarders or flatmates living in your international properties.

If you have an international rental property, please contact us for more information.

Mixed Use Holiday Homes

If you have a mixed-use asset, that is an asset that is used for both private use and income earning use and it is also unused for 62 days or more in the tax year then it will be subject to new tax rules.

In a property taxation context these rules clearly apply to holiday homes, however there is an exemption for holiday homes that are used for long-term rental purposes.

What expenses can I claim on a holiday home?

The expenses you can claim in relation to a holiday home have changed and now fall into the three categories below:

Fully Deductible Expenses

Expenses, which are incurred solely in relation to the income earning activity of the asset are still fully deductible, such as advertising for tenants for your holiday home.

Non-Deductible Expenses

Expenditure that relates solely to private use of the asset is not deductible and can include things such as costs related to storing personal assets at the holiday home or local club memberships.

Apportioned Expenses

If any expenses relate to both income earning use and private use, they must be apportioned based on the actual time that the asset is used for income earning activities versus the time that it is used privately.

In the case of holiday homes, this would be the number of days that the holiday home was rented to third parties at market rates.

In addition, if your holiday home does not earn gross income of at least 2% of it’s ratable value, you may not be able to claim a deduction straightaway, instead you will be required to ‘quarantine’ the excess expenditure and carry it forward to a future year.

For help with Investment and Rental Property Accounting & Tax
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