New Zealand: Worked Example of Tax on Rent

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Tax Example: Rent

Non-resident couple's joint monthly rental income1		US$1,500	US$6,000	US$12,000
Annual Rental Income		18,000	72,000	144,000
Less Costs2		(4,395)	(15,715)	(33,041)
Less Depreciation3		(12,000)4	(25,000)5	(57,600)6
= Taxable Income		1,605	31,285	53,359
Income Tax Rates
Up to NZD38,000	19.5%	313	4,914	4,914
NZD38,000 – NZD60,000	33%	-	2,008	4,815
Over NZD600,000	39%	-	-	5,291
Annual Income Tax Due		US$313	US$6,922	US$15,020
Tax Due as % of Gross Income		1.74%	9.61%	10.40%
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DISCLAIMER: The information contained above is marketing material only and is not written tax advice directed at the particular facts and circumstances of any person and should not be relied upon. We encourage you to discuss your particular situation with us or an independent tax advisor. This information was last updated on March 16, 2007.

Notes

Grant Thornton New Zealand is a member firm of Grant Thornton International. Grant Thornton International is not a worldwide partnership. Member firms of the international organization are independently owned and operated.

¹ The property is jointly owned by husband and wife. Exchange rate used: US$ 1 = NZD 0.66317.

² Estimated costs. Only expenses actually incurred may be deducted such as insurance, property agent fees (approximately 8% of the rent), land rates, repairs and maintenance.

³ Typical depreciation rates for buildings are 3% on a diminishing value basis or 2% of the cost. Accordingly, the depreciation deduction available will depend on the amount of land attached to the property. In these cases, the property is assumed to be a semi-detached home and has allocated 50% of the cost price for depreciation.

⁴ Property cost is US$ 1,200,000; depreciation = [2% * US$ 600,000].

⁵ Property cost is US$ 2,500,000; depreciation = [2% * US$ 1,250,000].

⁶ Property cost is US$ 5,760,000; depreciation = [2% of US$ 2,880,000].

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