Another month down and we are officially half way through the year!!
June has been a great month for New Zealand sport!!
New Zealand rowing kicked off their European campaign with a stunning collective performance in Poznan, Poland. New Zealand rowers won five gold medals in successive events in the space of an hour! The All Blacks won their first game against the British Lions, and Emirates Team New Zealand won the 35th Americas Cup!
To Celebrate these wins Xero came to the party and were offering a 35% discount for three months for any new Business Edition subscriber.
Business Edition allows you to send Invoices and Quotes, Reconcile Bank Statements, Enter Bills and better still your data is safe and secure in the cloud… no more backups and is accessible from any location in the world. If you would like more information about what Xero can offer please contact us.
Income from Rental Properties
Any income that you receive from renting out property will be liable for income tax! You must include it in your tax return. This income could be from renting out land or buildings, or it could be income you earn by having private boarders or flatmates living with you.
Amounts received for tenancy bond and passed on to the Tenancy Bond Centre are not income. Amounts received from the Tenancy Bond Centre for payment of damages, rent arrears etc, should be included as income.
The following expenses can be deducted from your rental income.
- Rates and insurance
- Interest paid on money borrowed to finance your property
- Fees or commission paid to agents who collect the rent, maintain your rental, or find tenants for you
- Repairs and maintenance (except if they substantially improve the property)
- Motor vehicle and travel expenses
- Mortgage repayment insurance
- Accounting fees for the preparation of accounts
- Depreciation (but not building depreciation)
Click here to find out about Rent in Advance and Tenancy Bond
Boarders, flatmates and tenants – tax responsibilities
Income you earn from boarders, flatmates or tenants staying in your private home or on your property, may be taxable. This includes granny flats, sleepouts and caravans.
Income from private boarders, including student homestays you can choose either the standard-cost method or the actual-cost method to work out whether you have to pay tax on this income.
The standard-cost method uses an average price for basics such as the cost of food, heating, power and transport. The amount is an average across the country and is inflation-adjusted annually.
If your income from boarders is less than the standard cost allowed, you will not have to file a tax return, keep records of related expenditure, or pay tax.
If you have one or two boarders then the current standard cost is $257 a week for each boarder.
If you have three or four boarders then same again, the standard cost is $257 a week for the first two boarders and $210 for each subsequent boarder. Need and example? Sure thing!
Example 1: If you have two boarders and they pay you $180 each a week, you do not need to file a tax return or pay tax.
Example 2: If you have two boarders each paying you $265 a week, you may need to file a return and pay tax, depending on your circumstances. The standard-cost method includes an annual capital house cost component as a further deduction before tax is payable.
Please note that: If you have five or more boarders you cannot use the standard-cost method. You are required to complete a tax return and include all payments received as income. You may claim actual allowable expenditure but you must keep records to support your claim.
Need to know more?
IRD has an great factsheet which you can read here Or even better contact your accountant today who can talk you through it.