New Zealand: Taxes and Costs
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Rental income tax is
high in New Zealand
Effective Tax Rate on Rental Income |
|||
| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 1.7% | 9.6% | 10.4% |
| Click here to see a worked example | |||
Source: |
Disclaimer | ||
INDIVIDUAL TAXATION
Non-resident individuals are liable to pay tax on their income from sources in New Zealand. The tax period in New Zealand is from April of the current year up to March of the succeeding year. Married couples are separately assessed and taxed on their income.
INCOME TAX
Taxable income is computed by deducting income-generating expenses, tax credits and tax rebates from the gross income. Income is then taxed at progressive rates.
INCOME TAX (APRIL 2008 – MARCH 2009) |
|
| TAXABLE INCOME, NZD (US$) | |
| Up to 9,500 (US$5,223) | |
| 9,500 – 14,000 (US$7,697) | |
| 14,000 – 38,000 (US$20,892) | |
| 38,000 – 40,000 (US$21,992) | |
| 38,000 – 60,000 (US$32,988) | |
| 60,000 – 70,000 (US$38,486) | |
| Over 70,000 (US$38,486) | |
| Source: Global Property Guide | |
RENTAL INCOME
Various expenses can be deducted from gross rental income, such as: rates (municipal land tax) and insurance; interest payments on mortgage to finance the rental property; agent’s fees for maintenance, collection of rent, and search of tenants; repairs and maintenance that is not considered as capital improvements on the rental property; motor vehicle expenses; legal fees incurred in arranging mortgage and drawing up a tenancy agreements (legal fees related to the buying and selling of the property are not deductible); accountant’s fee for the preparation of accounts; depreciation allowance to cover the cost of wear and tear and general ageing of the building and its contents.
Assets include buildings, capital improvements and chattels (furnishings, etc), which can be depreciated through either diminishing or straight scale. Buildings can either be depreciated by 4% (diminishing line) or 3% (straight line). Assets can be depreciated individually or in a group (pooled). Pooled assets can only be depreciated using the diminishing method, using the lowest depreciation rate in the group.
CAPITAL GAINS
Gains resulting from the sale of real property are not normally taxed in New Zealand.
They are taxed at normal income tax rates only under the following circumstances: the business of the taxpayer consists of dealing in such property, the property was acquired for the purpose of selling it, and the profits or gains were derived from the carrying out of an undertaking scheme for the purpose of making a profit.
PROPERTY TAX
There are no real estate taxes in New Zealand.
New Zealand - more data and information
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posted by Ernst | 2008-05-14
Dubai
"CAPITAL GAINS TAXGains resulting from the sale of real property are not normally taxed in New Zealand.They are taxed at normal income tax rates only under the following circumstances: 1. the business of the taxpayer consists of dealing in such property 2. the property was acquired for the purpose of selling it 3. and the profits or gains were derived from the carrying out of an undertaking scheme for the purpose of making a profit. ">> Reading this, I wonder who assesses whether I bought my property for the purpose of making a profit or otherwise. Is there a consensus in past rulings whereby owners that kept their properties for a minimum duration are exempted from this taxation (on the basis that it was not a speculative purchase, whether the owner rented the property out or not)? Ernst
posted by our Editor: Matthew Pollock | 2008-05-14
I would imagine the latter, but to be certain you must consult and accountant