Claiming expenses
If you own a rental property you can claim a variety of expenses at tax return time. These must relate to the costs of generating rental income, and must not include costs for private use.
Expenses you can claim
Insurance and rates
You can claim the cost of insuring your rental property and the rates for the property.
Interest
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 fees or commission paid to agents 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, and advice
but not 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, especially if the property is a “leaky” property.
If you’re unsure whether work done on your property is repairs or maintenance we suggest you talk to a tax agent.
Motor vehicle expenses
You can claim for motor vehicle expenses, such as running costs for travelling to inspect your property or to do repairs. There are two options for claiming motor vehicle expenses – you can either use the IRD kilometre rates or claim a percentage of the total running costs and depreciation.
Contact Dan for more information on Expenses you can’t claim, Claiming deductions when renting out your house or part of your home or If you rent out your holiday home. Also GST, Depreciation and Other exceptions.
dan@taurangarentals.co.nz or phone 07 571 1025