Whether you’re considering property investment, or already own a portfolio, to gain the best return from your investment, you need to know what expenses you can claim as tax deductible.
Insurance, Rates and Interest
As an owner, you can claim the cost of insuring your rental properties, the rates for the properties, as well as the interest charged on the money you borrowed to buy your Wellington rental properties.
Property Management Fees
Property Management fees are a business expense, meaning you can claim the fees or commissions paid to Property Managers for managing and maintaining your property, looking after tenant enquiries, collecting rent, advertising, and finding tenants for you. For example, if your property achieves $500 per week ($26,000 annually), the Property Management fee of 8.5%, after tax, is only $1,480 annually (or $2,210 before tax).
When hiring a professional accountant for your rental properties, you can claim the fees for your accounts being managed, the preparation of tax returns, and advice received.
Repair and Maintenance Costs
You can claim the costs for any repairs to the property or general maintenance, this includes the materials and trades-person's fee. Keep in mind that if you prefer doing repairs yourself, you can only claim for the 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.
By furnishing your Wellington rental property you are investing in a consumable product necessary to your business, and so these purchases can to be deducted as a business cost. To understand what you can claim, take a look at the IRD Depreciation Rate Calculator and the IRD Rental Income Report for more information about depreciation in rental properties. Your accountant will be able to advise on depreciation of each item, but you will need to provide them with either an original purchase price or their individual valuations when you purchased the property, if they came as part of the purchase.
A benefit of property investing is you can claim many of your rental property expenses as tax deductible, you just need to be aware of it. Property Management fees in particular is an expense people often don’t realise can be claimed as tax deductible.
If you’d like to learn more about our Property Managers, feel free to get in touch today. We manage property in the Wellington and Hutt Valley regions. Feel confident your property and tenants are looked after by our professional Property managers with our property management services .
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