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Jun 04, 2016

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 NZD 14,000 10.50% 169 980 980
NZD14,000 - NZD 48,000 17.50% - 6,586 3,967
NZD48,000 - NZD 70,000 30% - - 6,408
Over NZD 70,000 33% - - -
Annual Income Tax Due 169 7,566 11,354
Tax Due as % of Gross Income 0.94% 10.51% 7.88%
Source:
Global Property Guide research

Notes



1 The property is jointly owned by husband and wife.

2 Exchange rate used: 1.00 US$ = 1.50 NZD

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

4 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.

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

4-2 Property cost is US$2,500,000; depreciation = [2% * US$1,250,000].

4-3 Property cost is US$5,760,000; depreciation = [2% * US$2,880,000].

5 Rental income earned by nonresident individuals is taxed at progressive rates.

 





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