Where can I find info about paying income tax on my rental?

Question from Damien updated on 24th July 2008:

I own my own house in NZ and have a couple of people who pay rent to share. We split all bills evenly, and I wonder if there is any tax benefit to paying the extra income from them into my mortgage, therefore paying my mortgage off faster. Are the repayments tax-deductible? I cannot find this information on the IRD website. Thank you.

Our expert responded:

The pamphlet you will want to refer to is the IR264 rental Income - Tax Rules for People who rent out residential property, or who have boarders or flatmates. You can access it from www.ird.govt.nz. The answer lies in how much rent they pay you and what their share of expenses is. If the total money received from them is less than $213 per week each, for the two of them $426 per week. On that basis, you do not need to declare the income received, and neither are you able to offset any expenses incurred. Absolutely you will be better off if you use the 'rent' portion of the money received to go towards paying off your mortgage. Even just an extra $50 per week off your mortgage will make a huge difference to the total interest you pay over the term of the mortgage.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth.  She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.


 


 

 



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