Unplanned rental income
As a speculator or dealer, you may decide the time is not right to sell a property, so rent it out. If you decide to hold and rent out a property rather than selling it at a loss during times of declining property prices or slow sales, there are implications for income tax, and GST, if you are registered.
Income tax
Your rental income will have to be included in your income tax return and any costs associated with the rental may be claimed.
As a dealer or speculator you will not be able to claim any depreciation on the property as the property is treated as trading stock.
GST
Speculators or dealers may be registered for GST and so are likely to have claimed a GST refund when they purchased of the property.
When a property is acquired for the principal purpose of making taxable supplies (in this case property dealing or speculation), but is then applied for a purpose other than making taxable supplies (in this case residential rental), you must make an adjustment to reflect that non-taxable purpose.
Read our GST guide (IR375) to find out more
We recommend you talk to a tax advisor before renting out your property trading stock, especially if you're renting for the first time.
Find out more about the tax rules for people who:
Date published: 30 Jul 2010
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