The IRD recently reminded residential landlords that they must declare income from their rental property. That statement was hardly surprising.
What has caused some interest is that the IRD highlighted the case where part of a residential property was being rented out or where taxpayers rented their family home for a period of time.
Some taxpayers believe that the IRD are only interested in income sourced from a rental property where there is an agreed contract in place. This couldn’t be further from the truth. The IRD are interested in all income sourced from rent, including income received from self-contained flats, sleep-outs, rooms, caravans and holiday homes.
If you regularly rent out part of your property, or you’ve rented the family home for a period of time when you have been overseas, you should declare this income.
The good news it that there are a whole host of legitimate expenses that can be deducted including:
- Accounting frees
- Mortgage interest
- Insurances
- Property and water rates
- Estate agent fees associated with letting and managing the property
- Motor vehicle expenses
- Travel expenses
- Repairs and maintenance
This list is not exhaustive.
One area that is becoming increasingly complex is repairs and maintenance. Improvements to a property are not tax deductible whereas genuine repairs and maintenance are. It is always worthwhile checking with us first if you are planning any major work. The cost of the advice is far outweighed by the cost of getting it wrong.
Don’t hesitate to call if you are planning to rent your residential property. We can talk you through the common pitfalls to ensure that you are aware of all the issues.
