Specialist Rental Property Tax Accountants in Auckland
At ABA Chartered Accountants, we make rental property accounting simple, help you minimise tax, and take care of your rental property tax returns.
Whether you are a residential or commercial property investor, we can help you manage tax returns for all your rental property investments.
Our experienced rental property tax accountants provide clear, practical support to help you maximise returns while ensuring you stay compliant with ever-changing tax rules. From tax returns to direct communication with the IRD, we take the stress out of your property accounting and provide you with end-of-year Rental Property Financial Reports that are easy to understand.
Whether your interest is in long-term buy-and-hold properties, property development, or trading, ABA are the specialist property investment accountants in Auckland who can assist you with your property goals and tax obligations.
First time property investors?
Be aware of recent legislative changes relating to property investment!
If you’re a first-time investor or planning to expand your property portfolio, it’s more important than ever to seek advice from experienced rental property tax accountants before signing a Sale and Purchase Agreement.
Recent legislative changes around the bright-line test, interest deductibility, and ring-fencing of rental losses can all impact your investment returns.
Get in touch with us now and make sure you start off armed with the right knowledge – so there are no nasty tax surprises.
Rental Properties – Which Business Structure Should I Use?
The most appropriate entity for your property investment will depend on your circumstances and goals. Getting the structure right from the start can help you maximise your yields and reduce your tax burden.
Common property accounting structure questions include:
- Should I set up a look-through company (LTC)?
- Should my trust be a shareholder?
- How do I separate my business and property investment structures?
- How should I structure finance to maximise interest deductibility?
- How do associated persons rules affect me?
- How can I pay less tax on my rental properties?
ABA can guide you through these decisions, ensuring your structure supports efficient rental property tax accounting.
Legislative Changes Affecting Property Investors
Interest Deductibility
From 1 April 2024, investors can claim 80% of interest incurred on funds borrowed for residential property, regardless of when the property was purchased.
From 1 April 2025, rental property tax accounting rules will allow full deductibility at 100%.
Contact ABA for further advice and assistance.
Brightline Test
Brightline Test – Recent Changes
The bright-line test has changed from 1 July 2024. Properties sold within 2 years of acquisition will now be subject to tax on profits.
*This test is complex, and we recommend consulting our specialist rental property tax accountants before any purchase or sale.
Previous Legislation
- The two-year bright-line test was introduced on 1st October 2015 and applied to residential land that a person first acquired an interest in, on or after 1st October 2015.
- Note that the “start date” for the bright-line test is the date on which the instrument to transfer the land to the person was registered under the Land Transfer Act 1952.
- The bright-line test was extended to five years for properties bought on or after 29th March 2018.
- Therefore, any residential properties acquired after 29th March 2018 if sold within five years, would have been caught under this rule, and profits would be taxable.
The bright-line rules are complex and unforgiving, and there are instances where they don’t apply.
We highly recommend that you consult us as specialist accountants for property investors so that we can advise you on bright-line tax planning prior to buying or selling any residential investments.
Ring Fencing of Rental Losses
Ring Fencing of Rental Losses
Since 1 April 2019, rental losses can no longer be offset against other income. They are carried forward and can only be offset against future rental profits or taxable sales.
Historical Information about Ring Fencing of Rental Losses
- New legislation was introduced into Parliament on 5th December 2018 as part of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. Once passed in Parliament, it has been applied retrospectively from 1st April 2019.
- From that date, a rental loss generated from renting residential properties cannot be applied against other types of income. The rental loss will carry forward to the next year and can only be applied against future rental profit or taxable gains on the sale of the residential rental property.
- The ring fencing will be applied on a portfolio basis, which means a loss from one property can be offset against a profit from another property. Taxpayers can elect to apply the rules on a property-by-property basis if they do not want to apply them on a portfolio basis.
- For the purposes of ring fencing, the definition of residential land does not include a person’s main home, a property that is subject to the mixed use asset rules (for example a bach that is sometimes used privately and sometimes rented out), or land that is held/used in a land-related business (for example a sub-division or land development business).
For further information regarding Ring-fencing of Rental Losses please contact ABA as your specialist property accountants.
Why Choose ABA Chartered Accountants?
- Expertise in rental property tax accounting and compliance, including the latest legislation.
- Support for landlords, investors, and developers at all stages of property ownership.
- Practical tools like Xero setup, training, and support for easier property accounting.
- Hands-on advice from experienced property investment accountants in Auckland, keeping your property investments tax-efficient and compliant.
GST on Property Purchases and Sales
If you are considering becoming a property trader or developer, then you will need to register for GST and consider the implications of GST when you enter into a Sale and Purchase Agreement.
Likewise, if you are registered for GST and are selling a property you will need to account for GST on the sale.
Errors in accounting for GST on property transactions are very common and can be very costly.
Such errors include incorrectly recognising GST on zero-rated transactions which occurs when both the vendor and purchaser are registered for GST and the purchaser is not aware of this.
Another common error is not claiming GST on property acquired from non GST-registered persons.
ABA’s rental property tax accountants ensure your GST obligations are correctly managed, helping you avoid common and expensive errors.
Frequently Asked Questions about Property Tax in NZ
Whether you’re a first-time investor or an experienced landlord, understanding how property tax works in New Zealand can make a big difference to your after-tax returns. Below are some of the most common questions our clients ask about rental property tax, capital gains, and deductions.
How much tax do you pay on a rental property?
Rental income is taxed at your individual or company tax rate, just like other forms of income. You can deduct legitimate rental property expenses such as rates, insurance, property management fees, and some maintenance costs to reduce your taxable income. Your rental property tax obligation will depend on your net rental profit after allowable deductions.
Is there capital gains tax on commercial property in NZ?
Yes, in some cases. Although New Zealand doesn’t have a blanket capital gains tax, profits from selling commercial property can still be taxed if:
- The property was bought with the intention of resale, or
- You are in the business of dealing, developing, or building property.
Always seek advice before selling, as capital gains tax on commercial property in NZ can vary based on how the property is used and how long you’ve owned it.
Do you pay capital gains tax on inherited property?
Generally, inherited property is exempt from capital gains tax under the bright-line rule. However, if you later sell the inherited property within the bright-line period from the original owner’s acquisition date, tax may still apply. A property tax assessment can clarify whether the sale is taxable in your circumstances. Get in touch if you’d like to speak with one of our property tax experts.
How do you calculate capital gains tax on property?
If your property is subject to the bright-line test, your capital gain is calculated as the difference between the sale price and the original purchase price, minus certain allowable costs (such as legal fees, agent commissions, and capital improvements). This gain is added to your taxable income for the year. An accountant experienced in capital gains tax NZ property can help you calculate and report it correctly.
Are mortgage payments tax deductible for rental property?
Only the interest portion of your mortgage may be deductible.
From 1 April 2024, investors can claim 80% of interest incurred on funds borrowed for residential property, regardless of when the property was purchased.
From 1 April 2025, rental property tax accounting rules will allow full deductibility at 100%.
Principal repayments are never deductible.
Contact ABA for further advice and assistance.
Is painting a rental property tax deductible?
Yes – painting is usually considered a maintenance expense and therefore tax deductible, as long as it’s to maintain the property’s existing condition. However, if the painting is part of major renovations or improvements that increase the property’s value, it’s treated as a capital expense and not immediately deductible.
What rental property expenses are tax deductible?
Common rental property expenses tax deductible in New Zealand include:
- Rates and insurance
- Property management fees
- Repairs and maintenance
- Accounting fees
- Legal fees for tenancy matters
- Advertising for tenants
These deductions help reduce your overall rental property tax liability.
What are the tax benefits of owning a rental property?
Owning a rental property can offer various tax benefits, including the ability to offset legitimate expenses against your rental income, potential depreciation deductions (for chattels), and long-term capital growth opportunities. Working with property and tax advisors ensures you maximise your allowable deductions and stay compliant with current legislation.
How are overseas property investments taxed?
If you are a New Zealand tax resident, you must declare your overseas property income and may also be taxed on any capital gains from foreign property sales. Double taxation agreements may apply to reduce tax paid overseas. For non-residents, non-resident property tax rules apply, and the implications depend on where the property is located. It’s best to get advice before buying property overseas to understand tax implications in both countries.
What’s the difference between property tax and land tax?
In New Zealand, property tax generally refers to income tax on rental income or property gains, while land tax (a separate tax in some countries) does not currently exist here. However, rates charged by local councils can be viewed as a form of land-based levy. When comparing property tax vs land tax, New Zealand investors primarily deal with income tax obligations rather than land taxes.
When do I need a property tax specialist?
A property tax specialist can help you with:
- Buying or selling investment properties
- Bright-line rule assessments
- Claiming rental property tax deductions
- Structuring property ownership for tax efficiency
- Managing non-resident property tax obligations
Getting expert advice early ensures you stay compliant and optimise the tax benefits of rental property ownership.
Contact ABA Chartered Accountants Today
From managing complex tax rules to streamlining your rental property accounting, ABA Chartered Accountants are the rental property tax accountants and property investment accountants in Auckland you can rely on.
Contact us today to ensure your property investments are in expert hands.
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