What expenses can I deduct for my rental property in New Zealand?

As a landlord in New Zealand, you can deduct a range of expenses from your rental income to reduce your taxable profit. Expenses must be directly related to earning your rental income.

Fully deductible expenses:

• Mortgage interest (80% for the 2025 tax year, 100% from 1 April 2025)
• Insurance premiums for the rental property
• Council rates and water rates
• Property management fees and agent commissions
• Repairs and maintenance (fixing existing items to restore them to their prior condition)
• Advertising for tenants
• Legal fees related to tenancy agreements
• Accounting fees for preparing rental income tax returns
• Travel expenses for property inspections and maintenance (subject to record-keeping requirements)
• Body corporate fees for apartments and units

Depreciable items (claimed over the item's useful life):

• Carpets and vinyl flooring
• Curtains and blinds
• Appliances (stove, dishwasher, washing machine)
• Heat pumps and ventilation systems
• Hot water cylinders
• Light fittings
• Furniture in furnished rentals

Not deductible:

• Capital improvements (renovations that enhance the property's value, such as adding a new room or upgrading the kitchen)
• The purchase price of the property itself
• Residential buildings cannot be depreciated (only chattels within the property)
• Private portion of any expenses if the property is partly used for personal purposes

Important distinction: Repairs maintain the property in its current condition and are immediately deductible. Improvements enhance the property and must be treated as capital expenditure. For example, replacing a broken window is a repair, but upgrading single-glazed windows to double-glazing is a capital improvement.