As a landlord you can claim a variety of expenses to reduce the tax on your rental income. Here’s an overview of what you can deduct:
Mortgage Interest:
You can now claim interest as an expense for any residential investment property you own, irrespective of when the rental property was purchased or when the loan was drawn down. As of 1 April 2025, investors can claim 100% of the interest deduction instead of 80%
Insurance and Rates:
The costs for insuring your rental property and council rates are fully deductible.
Property Management Fees:
If you hire an agent to manage your property, their fees are deductible.
Maintenance and Repairs:
Costs incurred in maintaining or repairing your rental property can be deducted, provided they relate directly to wear and tear or other damage that occurred as a result of renting out the property.
Professional Services:
Fees for accounting, legal advice, and services directly related to the operation of your rental property are deductible.
Travel Expenses:
Costs for travel to and from the property for inspections or maintenance are also deductible.
Legal Fees:
You can claim legal fees involved in the buying of a rental property if the expense is $10,000 or less.
Other Costs:
Additional deductible expenses might include costs for drawing up tenancy agreements, bank charges related to financing the property, and costs for evicting a non-paying tenant.
It's important to note that capital expenses, like the initial purchase price of the property, improvements, and renovations that add value to the property, are not deductible. These are considered capital improvements and form part of the cost base of the property for capital gains tax purposes.
Keep in mind that the rules regarding what can be deducted are subject to change, especially with the recent adjustments in tax laws affecting property investment in New Zealand. For the most accurate and personalised advice, it's recommended to consult with a tax professional or refer directly to the Inland Revenue Department's guidelines on rental income and expenses.