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INVESTMENT PROPERTY

Cornish Accounting provide affordable investment property accounting whether you are new to the rental market or have been in it a while to ensure you comply with the ever-changing tax laws.  From individuals, partnerships, and trusts to companies with both residential and commercial property portfolios, we take care of your taxation obligations and assist you with property accounting advice to help you maximise your rental property returns.

Expenditure that can be claimed:

 

  • Accounting fees & consulting fees
  • Advertising- for tenants
  • Assets under the value of $1000 purchased separately
  • Bank fees
  • Bank mortgage interest (subject to recent law tax changes)
  • Business use of home (so long as you do not have a property manager)
  • Cleaning and rubbish
  • Costs involved in evicting a tenant
  • Depreciation- where applicable
  • Fees incurred when drawing up tenancy agreements
  • Fees incurred when arranging a mortgage to finance rental properties
  • Garden maintenance
  • Insurance
  • Legal fees- up to threshold
  • Power/ gas – can occur if you need to carry the cost between tenancies
  • Property management
  • Rates
  • Repairs & maintenance
  • Security
  • Travel to inspect or new tenancy viewing

 

 

Expenditure that cannot be claimed:

 

  • Capital expenses
  • The rental property purchase price
  • The principal part of mortgage repayments
  • Costs related to improving the property, beyond repairs and maintenance
  • Real estate agent’s fees incurred as part of buying or selling the property.
  • Building’s depreciation (residential)
  • Your own time involved when carrying out repairs and maintenance work

Residential Property Interest Limitation Rules

From 1 October 2021, interest cannot be claimed for residential property acquired on or after 27 March 2021. 

For properties acquired before 27 March 2021, the ability to deduct interest is being phased out between 1 October 2021 and 31 March 2025.

For more information on IRD property interest rules click here

 

 

How interest deductions are being phased for properties acquired before 27 March 2021

 

Date interest incurred

Percentage of the interest that can be claimed

1 April 2020 to 31 March 2021

 100%

1 April 2021 to 30 September 2021

 100%

1 October 2021 to 31 March 2022

 75%

1 April 2022 to 31 March 2023

 75%

1 April 2023 to 31 March 2024

 50%

1 April 2024 to 31 March 2025

 25%

On or after 1 April 2025

 0%

**Some properties are excluded from these rules and some exemptions apply

Calculators

Property Interest Calculator-

The Property interest calculator is a great tool to help work out how much interest is deductible, if your property is affected by the interests limitation rule.

Calculator

Interest Apportionment Calculator –

The new-build interest apportionment calculator is a tool to determine how much interest is deductible if your property has both a new build and non-new build and you are required to apportion your interest deduction.

Calculator

Residential Rental Property Excess Deductions

When your rental expenses for your residential property are more than your rental income you’re left with excess deductions.  You’ll need to carry excess deductions forward into the next tax year you earn residential rental income.

 

LINK- Rental Income Guide – Tax rules for residential property and holiday homes