Te tātai utunga ina noho koe i te whare Working out expenses when you live in the property

This is what you've spent on your rental property to only earn rental income, such as advertising. 

Rental expense deductions

These are your shared rental expenses from income-earning use and private use of your property, such as rates.

It's your total shared expenses for the year.

You'll need to do this in square metres.

This is the income-earning area of the rental property.

Divide this by the total floor area to give you a percentage. For example, if 25 m² of a 100m² house is used only by guests or tenants the percentage of expenses you can claim is 25%.

This is the area of the room or rooms that are used by both the tenants, guests and you. For example shared lounges and bathrooms.

Divide this by the total floor area to give you a percentage. You can claim half of the expenses calculated using this percentage for shared common areas.

Work out the shared area and divide that by 2 to get the shared area expenses that you can deduct. For example 30 m² of the 100 m² house are common areas. The shared area is 30% of the house, divided this by 2 and 15% of the total shared common area expenses can be deducted.

Add together the percentages of income earning use and shared common areas.

For example 25% plus 15% equals 40%. This is the percentage of total shared expenses you can claim.

This is your shared use expense apportionment.

Multiply the total shared expenses by the shared use expense apportionment. This is the shared rental expense total you can deduct.

Add your fully deductible expenses to your total shared expenses.

This is your total rental expenses.

Add up the days your property was rented. 

This is your total income earning use days. 

You may include the days your property, or part of it, was available to rent for any area intended to be used exclusively by guests. You’ll need to do a separate calculation for this. You’ll also need to keep records to show it was available to rent and not used privately at all during this time.

Rental property records

Divide your income-earning use days by the days in the year.

For example, 300 divided by 365 is a divided amount. Make the result a percentage. In this case your divided amount is 82%.

Multiply your total rental expenses by your divided amount. 

These are your total allowable rental expenses you can deduct from your property's gross rental income.

After the deduction, the amount left over is what you'll pay income tax on.