Getting into investment property here in New Zealand can seem like a big task, especially if you're branching out from just being a home owner. But once you get into it, there are so many benefits open to you – the nest egg is a long-term plan, but tax deductions will reward you while you wait. Here are three you should know about.
If you're taking out a loan on a property, there will be legal fees involved with organising the lending. You can claim these expenses, and the interest you pay on your loan, as tax deductible. This can be particularly useful if you take out an interest-only loan. This means your interest costs are minimised and you can maximise benefits if you sell the house down the line. Got mortgage repayment insurance? You can claim on that too – easy as pie.
Agent fees and commission
If you're buying a property for investment, you'll most likely be renting it out to people to supplement your income. Property managers that bring in tenants as well as commission charged by agents are both tax deductible expenses – it's like there's no end to the rewards you can reap!
Repairs and maintenance
Of course, wear and tear can happen, but the good news is that – you guessed it – this maintenance is also tax deductible. However, if it constitutes a significant improvement or renovation, you may not be able to claim taxes on it. Just in case you were thinking of fixing that broken door by installing a new spa bath.
These are only a few of the things you can claim as tax deductible when you buy an investment property. Though the wait may test your patience, these deductions can be great appetisers before the main course that is your nest egg blooming.
Here's to your financial independence!
Authorised Financial Adviser / Investment Property Expert