Can anyone tell me how depreciation is applied to NZ property? I saw an old post that states that there are benefits across the board. Upon settlement, would you use the services of a quantity surveyor? How much of an advantage will the depreciation add (If any) to the bottom line of a 200k property say?
Cheers
PursefattenerFrom memory deprication on NZ property is 5%. But check this with your accountant – do NOT take my word for it (as it’s from memory and I don’t invest in NZ).
Rgds.
Lucifer_auHi Pursefattner,
I was anticpating some of the New Zealand investors may have been able to point you in the right direction with this one. So I’ll be upfront in saying I am only passing on ‘what I have heard’ and as such you will need to check the situation out.
As I understand it any tax deductions you earn in New Zealand can only be offset against New Zealand income and as such they provide no benefits to your Australian Property.
In answer to your question may I suggest a look at NZ Tax Office website and possibly do a search for NZ depreciation companies. They will be better placed to provide more accurate information.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hey pursefattener (cool name!!)
Depreciation write offs are at a better rate than here in Oz for NZ – on the contract going unconditional I have organised a Chattels Depreciation Schedule (Valuit.co.nz are one firm that will do this for you). It is dated from the date of settlement. I like to get it sorted out ahead of time so that I can get on with refurbishments ASAP if there are any to do (and then add the changes on through my accountant).
The depreciation write off is then applied according to the schedule in each tax year. IF YOU MAKE A PAPER LOSS on your property because of the write off, you cannot bring it home to Aus to offset against Aus income. The loss is trapped in NZ but can be carried forward to offset against a future capital gain. (this is how it works for individual and family trust setup I have, should be aware that different structures may have different accounting rules. The NZ ATO is called the IRD!!!)“How much will that add to the bottom line of a 200K property?” is going to depend really on the value placed on the building and chattels. The more chattels in the equation the higher write off as building is only (I seem to recollect????) 4% pa, as opposed to some chattels which can be written off at 15% pa. Kinda a how longs the piece of string question, I can’t give precise ideas on.
Anyone else help out here??
Cheers
CDCastleDreamer
Hello, and thankyou for the helpful replys.
What would you expect to pay in fees for a schedule to be prepared and would you have one prepared on virtually any residential purchase in NZ?
I have wondered, that on a modest purchase ,it may be a case of robbing Peter to pay Paul???
Many Thanks
PursefattenerHi Pursefattener,
As a guide:
A depreciation report in Australia can be purchased through Deppro for ~$440 when I last bought one. Scott (AKA Depreciator) charges around $700 (from memory) and will refund the fee if they cannot get refunds with a value higher than their fee.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
So would you have one done for any property you purchased over there and have it sorted before settlement?
Pursefattener
Hi Pursefattener,
I certainly would make the phone calls and talk to the experts on the ground over in NZ and identify who you want to contract.
Talk to them about the property and they should be able to give you an indication of whether or not it will be getting a report done. As laws differ between Aus & NZ it would also be useful to refer the matter to a NZ savvy accountant.
Then when settlement is effected and the property is yours you can get the wheels in motion if it is going to be of value to you.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hey Pursefattener.
As all buildings can be depreciated, the age of the property isn’t so important over there.
I use valuit.co.nz. for about 350? approx they pretty well guarantee to get more than that in deductions per annum.. I have a schedule due in the mail shortly that I can refer to and continue this thread if you want. Let me know.
Cheers
CDCastleDreamer
The depreciation rates on buildings in NZ are 4% diminishing value. When buying a property you can also have the chattels valued separately ie floor coverings, light fittings, curtains etc. these chattels depreciate at higher rates than buildings. Refer to a site http://www.valuit.co.nz, it’s around NZ$400 for a depreciation scedule to be prepared.
Also try http://www.ird.govt.nz there is a depreciation booklet available and also one on rental property tax deductions.
Happy hunting
JeffMany thanks for putting me in the picture.
Just another thing- Eventually when an investment property is sold in NZ, many years from now, can there be tax of a sort to pay as a result of claiming depreciation through the years?
I’m certainly no expert in this area.
At present, I am in the process of a purchase of three units in New Plymouth(NZ). They were built in the early 1980s.I am about to contact valuit.co to make the arangements.
Thank you again
PursefattenerSo far there is no capital gains tax in NZ as such – it is based on your intentions when you first purchase the property eg if for immediate resale then the capital gain maybe classed as profit.
As an investor, where the purchase is to derive income, when you come to sell the properties the government will claw back the depreciation claimed only if there is a capital gain. This is termed “depreciation recovered”. It’s free use of money no matter which way you look at it – claim the depreciation.
If you go to a site http://www.goodreturns.co.nz there is a book titled “Slash Your Taxes”. It gives a pretty good insight into expenses etc that one can claim in NZ.
Cheers
Jeff
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