Claiming deductions for mixed-use assets

Income tax Dates

MAY 28

AIM instalments are due if you file GST monthly and have a March balance date.
JUN 28

Provisional tax payments are due if you have a March balance date and use the ratio option.
JUN 30

AIM instalments are due if you have a March balance date.

All Income tax dates

Expenses from mixed-use assets fall into 3 types - fully deductible, non-deductible, and apportioned.

Fully deductible expenses

You can claim deductions and GST for 100% of any expense that relates only to the asset's income-earning use. For example, the cost of advertising for guests for your holiday home, or the cost of repairs when your boat was damaged during a charter trip.

Non-deductible expenses

You cannot claim any expenses or GST that relate to the asset's private use. For example, the cost of a quad bike stored in a locked garage and unavailable to the people renting your holiday home.

Apportioning (splitting) expenses

If an expense relates to both income-earning use and private use, you need to apportion the expense. For example, rates, insurance, internet and power.

Deductible interest for residential property

From 1 October 2021, the interest limitation rules have limited the ability to claim interest as a deduction for your holiday home in New Zealand, unless an exemption or exclusion applies. If interest is deductible, you will need to apportion it between both income-earning use and private use.

Property interest limitation rules

Private use of an asset

Private use of your mixed-use asset means use by:

you, your family or associated persons, regardless of whether they pay you
non-associated persons if they pay you less than 80% of market rates for the use of the asset.

Any payment you get for private use is counted as exempt income and does not need to be declared in your tax return. You cannot claim expenses relating to private use.

Income-earning use

Income-earning use means use by a non-associated person who pays you 80% or more of market rates for the use of the asset.

Income-earning days include any days you spend either occupying or using the asset to:

fix any damage to the asset, if the damage happened on an income-earning day
relocate the asset, if you're paid to do so.

For GST, income-earning days includes all days that you get any money or other reward, no matter the percentage of market rate paid.

Te kerēme tangohanga mō ngā rawa whakamahinga hanumi Claiming deductions for mixed-use assets