Preparing your rental property tax return in New Zealand can be intimidating, but it's crucial to ensure that you're doing it correctly to avoid any potential issues in the future. We've compiled some straightforward steps to help you get started and make the process less daunting.
First, determine your total gross revenue received from renting out your property. Remember that gross revenue is your total earnings before any deductions are taken off. If you use a property manager, be sure to keep this in mind.
Next, create a list of all the allowable deductions that you can claim for expenses related to generating rental income. These can include mortgage interest, rates, insurance, agent fees, repairs and maintenance, and travel costs for inspections.
It's important to note that the rules for claiming mortgage interest have changed recently. There is now a phase-out of interest deductibility for most rentals, with a few exceptions for new builds. Make sure you're aware of these changes and factor them into your calculations.
Once you've calculated your profit or loss, it's time to add it to your personal tax return. Keep in mind that you'll need to pay tax on any rental income you make, but losses can be carried forward to future years to offset future profits.
Preparing your rental tax return doesn't have to be a daunting task. Follow these simple steps to ensure that you're doing it right, and don't hesitate to reach out to us at Your Finance Team if you need assistance. We're here to help you navigate the process and make it as smooth as possible.
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