The basics of tax deductions
It's not something that we like to think about it to much, but with the new financial year well under way, you'll need to keep on top of it: Tax. It might strike fear into the hearts of New Zealanders, but did you know it can actually work in your favour? If you're running your investment as a rental, you might be able to deduct some of the expenses you've racked up from your rental income. Here's a break down on what you can claim back – and what you can't.
What you can claim
There's plenty to do to keep your tenants happy and your residential investment property ticking over. So what expenses can you claim back? Luckily, there are plenty and it's a good idea to check in with your Authorised Financial Adviser about what part these play in your strategy. The IRD sets down what you can and can't jot down on your tax return, but among other things, you can write off rates and insurance, agent and legal fees, as well as travel costs.
You can also claim repairs and maintenance costs, but you need to make sure that this work hasn't been done to add value or significantly improve the home.
And what you can't
The most important thing to know is that you can't write off any costs for big improvements or renovations that were designed to add value, or the price you pay to buy the home. As well, anything you claim back needs to be related to the running of your rental – they can't be private expenses, according to the IRD.
Tax is a big part of residential property investment in New Zealand, so understanding its ins and outs is important – and investment advice from your Authorised Financial Adviser, like us here at Goodlife can help. We'll make sure your investment's tax structure is set up effectively to help you get the most from your strategy.
Here's to your financial independence!
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