COVID-19 updates this week

With the country now at Level 3, many more businesses can now operate which is great news. Worksafe has published guidelines for operating safely at Level 3 and there’s a good page about workplace operations at all levels on the website. Business tax support The government announced a further set of tax proposals to help businesses manage the impacts of COVID-19.  These include: Greater flexibility for taxpayers in respect…  Read more

Reminder: Rental losses ring-fenced from 2019/2020 tax year

The new law on ring-fencing rental losses is now in force, which means: In most cases ring-fenced deductions will be carried forward and can only be used against residential rental or sale of property income in future years. Property investors will, in most cases, no longer be able to reduce their tax liability by offsetting residential rental property deductions against their other income, such as salary or wages, or business income.…  Read more

What are the hidden costs of buying a house?

A word to the wise if you’re shopping for a new home: the list price is only a baseline.  You’ll want to have a substantial buffer in your budget for a host of additional unseen fees. This article will help you understand all the associated costs of buying a house so you’re prepared. Purchase Fees Appraisal Before a lender will approve your mortgage you may be asked to undertake an…  Read more

Property Sales on IRD Radar

  Buying or selling a home? You’ll now need to provide your IRD number as part of the transaction process. The change will allow IRD to know who’s flipping owner-occupier homes on a regular basis, and better enforce the existing law that ensures people pay tax on the profit. The move won’t impact the rules around who’s required to pay tax on investment property though.  Read more

Can residential property fund your retirement?

Thinking about retirement can be stressful.  You need to plan for how long you think you’ll be retired, what lifestyle you’ll want to lead, and approximately how much you’ll pay to maintain your cost of living plus any additional expenses.  There are a lot of unknowns and “what ifs” that you might not be able to anticipate, and many of them can affect your finances. Many people ask whether residential property…  Read more

Own residential property? Take note!

In an effort to level the playing field between property investors and home buyers, a new law ring-fencing rental losses looks set to come into effect on 1 April 2019. It means you’ll no longer be able to offset tax losses from your residential properties against other income (e.g. salary or wages, or business income). However, the losses will be able to be used in the future when the properties…  Read more

Which home loan is right for you?

Considering home ownership?  Congratulations!  Buying a home is an exciting milestone and for most people, one of the biggest investments they’ll ever make.  Among the many decisions to be made along the way, you’ll need to choose the best mortgage option for your circumstances. In this blog we’ll weigh the pros and cons of fixed, variable, and revolving credit home loans to help you make the right choice. Why choose…  Read more

Common Homeowner’s Insurance Terms That You Should Know

While homeowner’s insurance isn’t required by law, it is often required if you are taking out a mortgage in order to purchase your home. There are a lot of things that you need to think about when purchasing homeowner’s insurance, including what types of coverage you think you need. This can be a challenging task, especially if you are not up to date on your homeowner’s insurance terminology. The following…  Read more

Ring-Fencing of Residential Rental Property Losses

Inland Revenue are proposing the introduction of a loss ring-fence for residential rental property losses. What is Ring-Fencing? Essentially ring-fencing means that losses from a trade can only be offset against income from the same trade. The proposal is for the loss ring-fencing rules to apply on a portfolio basis.  This means that investors would be able to offset losses from one rental property against rental income from other properties…  Read more

Safe as houses: Stop Press!

Revenue Minister Stuart Nash has confirmed the bright-line test on residential property sales will be extended from two years to five years. At present, income tax must be paid on any gains from residential property sold within two years of acquisition, with some exceptions (such as the family home). The extension means that profits from residential investment properties bought and sold within five years will generally be taxable. To make…  Read more

Tenants must be informed of insulation status

It’s been compulsory since 1 July last year for any new tenancy agreement to include an Insulation Statement. That means landlords must record if rentals have insulation, where it is, the type of insulation and its condition. That allows tenants or potential tenants to make more informed decisions about renting. Insulating rentals is now mandatory On top of that, if you have rental property without floor and/or ceiling insulation, you…  Read more

Airbnb usually a tax case on its own

If you use Airbnb to provide short-term accommodation in your house in which you also live, the IRD’s “mixed-use asset (holiday home)” rules don’t apply and guests are not classed as boarders. Except when you list a whole house which is vacant for 62 days each year, mixed-use asset rules do apply and calculations differ from those for homes where the hosts also live. Claimable expenses Anything you spend as…  Read more

Must I pay tax on holiday home income? That depends

If you rent out your holiday home sometimes, you may have to pay tax on that income. The IRD says you have a “mixed-use” holiday home if, during the tax year, you use it for: Private use, and Income-earning use, and It’s unoccupied for 62 days or more It is still private use if you receive rent from family members, or from non-family members who pay less than 80 percent…  Read more

Tax is payable on rental income… mostly

If you receive income, you must pay tax. So if you have rental income, you have to pay tax on it, right? Maybe, maybe not – if you get rent from boarders or homestays. Boarders and homestays When you get income from boarders or homestays, your tax position depends on how many boarders you have, and how much you charge, compared with the IRD’s standard-cost method. In other words: If…  Read more

Changes in Meth Testing Rules for Property Owners

Tenancy Services states that landlords must provide a clean property, and that both landlords and tenants should check for any signs of ‘P’ before a property is rented. If the landlord does not check and rents out a contaminated property, they breach their obligations under the Residential Tenancies Act 1986, the Building Act and the Health Act. According to a recent blog by Quinovic, the Tenancy Tribunal is beginning to…  Read more

Buying off the plan? The bright-line test and you (Summer 2016)

We’ve talked before about how changes to tax law around buying and selling property might affect you. Now that the changes are in operation and the bright line test is being applied to determine tax liability, an issue highlighted only recently might leave you exposed. As we’ve discussed before, people who buy or sell a property within two years of acquiring it must pay tax on the gain. The main…  Read more

Do You Own Rental Properties? (Spring 2016)

If you gain income from rentals, be aware you need to comply with new rules. On 1 October 2016 changes to the Residential Tenancies Regulations came into force to reflect new standards on insulation. Standards New Zealand’s ‘Energy efficiency – Installing bulk thermal insulation in residential buildings’ provide extended guidelines for insulation installers and building owners. This follows up on changes which took effect on 1 July 2016 requiring all…  Read more

Changes to Land Sales Could Affect You (Winter 2016)

Are you selling residential land? From 1 July 2016, a new withholding tax – residential land withholding tax (RLWT) – may need to be deducted from a property sale/disposal. This will occur where the property being sold/disposed of is in New Zealand and meets the definition of ‘residential land’, and the vendor: acquired the property on or after 1 October 2015, and has owned it for less than two years…  Read more

IRD Numbers for Property Sales (Summer 2015)

All vendors and purchasers of property other than their main home must now provide an IRD number as part of the land transfer process. Non-residents Offshore buyers must provide a New Zealand bank account number before they can obtain a New Zealand IRD number. And all non-resident buyers and sellers must provide their tax identification number from their home country, along with current identification requirements such as a passport. Family…  Read more

New Property Tax Rules (Summer 2015)

New legislation affects property sales made from 1 October 2015 onwards. The changes hit in a variety of ways. Bright-line test and residential land New tax rules now apply to residential property sales made from 1 October 2015. A new ‘bright-line test’ will apply where a person who has purchased a residential property on or after 1 October 2015 then sells it within two years. The sale will be taxed…  Read more

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