In our recent Live Webinar: '5 Hidden Tax Hacks Most Property Investors Are' Missing Matthew Harris and Andrew Higgs unpacked the most overlooked tax opportunities for property investors. From depreciation on chattels to restructuring debt, they explored smart strategies that help investors legally reduce their taxable income and keep more money in their pocket.
Hidden Deductions Most Property Investors Miss
One of the biggest takeaways from the webinar was how often New Zealand property investors overlook chattels depreciation. While properties themselves are considered capital assets and don’t depreciate, the items inside them – like ovens, carpets, blinds, and heat pumps – certainly do.
A chattels valuation allows investors to claim a non-cash expense each year, reducing taxable income without any new out-of-pocket spending. As Andrew demonstrated, even a $500 valuation can pay for itself in the first year, often saving hundreds in tax and thousands over time. For new-build investors, the savings can reach $10,000-$20,000 annually.
Home Office Expenses: The Forgotten Deduction
Another area where investors miss out is home office expenses. If you manage your rental from home – whether handling repairs, emails, or tenant communication – you’re entitled to claim a percentage of household costs like internet, electricity, rates, and insurance.
As Matthew explained, this deduction was made possible after a landmark court case (Banks v Commissioner of Inland Revenue). The key is reasonableness: if you manage one rental, claiming 10% of your home’s running costs is generally acceptable. While it might seem minor, these claims compound over time and directly reduce your tax bill.
Debt Restructuring: Turning Non-Deductible Debt Into Deductible
One of the most impactful strategies discussed was restructuring debt through an LTC (Look-Through Company).
Imagine you’ve paid off most of your home loan and decide to keep your old house as a rental while buying a new one to live in. By transferring the old property into an LTC, you can make the investment debt – not your personal mortgage – tax-deductible. This simple change can save thousands every year in interest deductions while improving your long-term cash flow.
As Andrew noted, there must be a genuine commercial reason for the restructure beyond tax benefits (for example, asset protection or separating investment activities).
Travel and Professional Expenses
While not every expense qualifies, reasonable travel deductions are still possible. Trips to inspect your property, meet tradespeople, or attend relevant seminars can often be claimed – provided you keep clear records. Mileage, accommodation, and meals tied to the investment activity can add up, delivering incremental tax savings over time.
Similarly, professional fees such as accounting, valuation, and legal costs tied to managing or improving your investment portfolio are legitimate deductions that many overlook.
Key Takeaways
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Chattels depreciation can save investors thousands annually – especially on new builds.
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Home office expenses are often under-claimed but legally allowed when managing rentals.
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Debt restructuring via an LTC can make more of your mortgage interest tax-deductible.
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Travel deductions must be reasonable and well-documented to stand up to IRD scrutiny.
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Professional advice ensures you’re compliant while maximising your legitimate deductions.
Next Steps:
If you’d like to review your property structure or uncover potential deductions, book a free 30-minute consultation with a Lighthouse Financial accountant today.
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.
