The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Greg Millar
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Ring-fencing rental losses

From the 2019-20 income year onward, new rules apply to deductions claimed for residential properties.

house hands-824Residential property deductions will now be ring-fenced, meaning that they can only be used to offset income from residential property.

This means that the residential property deductions you claim for the year cannot exceed the amount of income you earn from the property for the year.

Any excess deductions (“rental losses”) will be carried forward from year to year until they can be used. You can no longer use excess deductions from your residential property to off-set other income, such as salary and wages.

NZ Inland Revenue is introducing changes for the 2020 tax returns which will allow their system to calculate the amount of excess deductions to be carried forward for the year. This amount will be automatically included in the following year’s return in a new box called “excess residential rental deductions brought forward”.  

If you file a paper return, you will need to manually calculate the amount of excess rental deductions to carry forward and show this on your return. When completing the following year’s return, you’ll need to refer to your accounts for this amount and show it as excess residential rental deductions brought forward.  
Visit the NZ Inland Revenue's website to find out more about residential property changes: or call Alliott NZ's accountants in Auckland on 09 520 9200.

Source: NZ Inland Revenue

Topics: deductions IRD property residential tax return