Many property investors overlook key opportunities that could save them thousands each year. In this blog, we break down 5 hidden tax hacks most NZ property investors are missing - practical strategies that can make a meaningful difference to your bottom line.
Chattel Depreciation
One of the most underused deductions for property investors is chattel depreciation. Chattels are everyday items within a property such as carpets, curtains, light switches, and appliances. Unlike the property itself, which usually gains value, these items wear out and lose value over time – making them deductible.
A chattels valuation can provide significant upfront deductions. For example, an $11,000 valuation at 20% depreciation equals around $2,200 of deductions in the first year. Over time, this can add up to about $6,000 in tax savings.
Chattel depreciation works particularly well for:
-
New builds, where all items are new and easy to identify.
-
Existing investment properties before tenants move in, allowing for clear valuations.
However, it’s less effective if you’ve recently completed a renovation (you already have receipts for chattels) or if you’ve owned a rental property for many years. As always, consult your accountant to weigh up the cost of a valuation (around $550 plus GST) against the potential tax benefits.
Home Office Expenses
If you manage your rental properties from home, you may be entitled to claim home office expenses. This deduction was established through the historic Banks vs. Commissioner of Inland Revenue case, where it was ruled that part of a home used for business purposes can be claimed.
Common deductible expenses include:
Most investors typically claim around 10% as a standard allowance, though those with dedicated storage or workspace (e.g. a garage full of maintenance supplies) may be eligible for more. While you can’t double-dip if you also run a business from home, this remains a straightforward deduction many investors miss.
Restructuring with Look-Through Companies (LTCs)
Another overlooked strategy is restructuring debt through look-through companies (LTCs). This is especially useful when converting a former home into a rental property.
For example, if your old home has a low mortgage but your new owner-occupied property carries high, non-deductible debt, an LTC restructure can shift more of the debt into the deductible investment side. The result? Potential tax savings in the tens of thousands each year without changing your overall level of debt.
Now that full interest deductibility has been restored, restructuring is back on the table for many investors. If your portfolio looks anything like this scenario, it’s worth seeking advice – because these changes can be transformative.
Travel Deductions
Many investors ask whether trips can be claimed as tax-deductible travel expenses. The answer depends on purpose and reasonableness.
Where business and personal travel mix – such as attending a property conference overseas while the family holidays – you may be able to split expenses, claiming the work-related portion. The golden rule is to ensure there’s a clear connection to your income-generating activities.
Professional Fees
Finally, don’t underestimate the value of professional fees. Accounting services, property management, valuations, and legal advice are generally 100% deductible. Not only do these services save time and reduce stress, but they also often pay for themselves through the tax advantages and efficiencies they create.
As the saying goes: price is only a problem when value is absent. A skilled professional will help ensure your tax position is maximised year after year – something every investor should prioritise.
Key Takeaways
-
Chattel depreciation can deliver thousands in non-cash deductions, especially in new builds.
-
Home office expenses allow you to claim part of your household costs when managing rentals.
-
Restructuring with LTCs can move debt into deductible investment property loans.
-
Travel deductions must be reasonable and clearly connected to property income.
-
Professional fees are deductible and often add far more value than they cost.
Next Steps
Want to ensure you’re maximising every deduction available? Talk to the Lighthouse Financial team – New Zealand’s property accounting specialists – about how these strategies apply to your portfolio.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
