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.

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Greg Millar
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Whether you can claim or not will depend on the nature and extent of the repair work

tap-926What you can claim

If you have a rental property that is classified as a “leaky” property, you can usually claim deductions for repair work and general maintenance.

But there are some circumstances when the cost of repairs can’t be deducted:

  • When the nature and extent of the work means it has gone beyond repairs, changing the character of the asset (or substantially the whole of the asset).
  • When the work involves substantial reconstruction, replacement or renewal of the asset (or substantially the whole of the asset).

This kind of work is considered to be a capital improvement.

What is meant by asset

If your property is a standalone property that does not share any structural foundations or facilities with other properties, the asset is your property.

If your property is a unit of many in an apartment building or a large complex that shares structural foundations, walls, roofing, plumbing and other facilities with other units, the asset is the apartment building or the complex and not the individual unit.

This is important. If the repair work to your unit is part of a bigger project to repair the rest of the building, and the end result is a capital improvement to the building, you won't be able to claim deductions to work done to your unit.

If you're unsure whether work done on your property is repairs or improvements we suggest giving Alliotts a call in Auckland on 09 520 9200.

Source Inland Revenue

Topics: deductions Inland Revenue Department property tax