If you own a rental property in Rotorua, there’s a good chance you’ve wondered whether rental management fees are tax deductible. The good news is, in most cases, yes, they are!
As a landlord, managing a rental property comes with its fair share of expenses, and knowing what you can (and can’t) claim at tax time can make a big difference to your bottom line.
What Are Rental Management Fees?
Rental management fees are the costs charged by a property management company, like Rotorua Rentals, to look after your investment property. These fees usually cover services such as:
- Finding and vetting tenants
- Collecting rent
- Organising repairs and maintenance
- Conducting regular property inspections
- Handling tenancy paperwork and compliance
These services help ensure your rental property is running smoothly, but they also come at a cost. Fortunately, those costs can usually be claimed back as a tax deduction.
Are Rental Management Fees Tax Deductible in New Zealand?
Yes! In New Zealand, the Inland Revenue Department (IRD) considers property management fees to be a legitimate expense incurred in the process of earning rental income. This means they’re generally tax deductible when you file your end-of-year tax return.
It’s not just management fees either, landlords can usually claim a range of expenses related to their rental property, such as:
- Rates and insurance
- Repairs and maintenance (restoring the property to its original condition)
- Legal fees (for tenancy-related issues)
- Accounting fees
- Mortgage interest (depending on when you purchased your property) *
* It’s important to note that recent rule changes mean mortgage interest deductibility may be limited for some residential properties. Always check with an accountant for advice specific to your situation.
What About GST?
If your property manager is GST registered and charges GST on their fees, and you yourself are GST registered (this is uncommon for residential landlords), you may also be able to claim the GST component of those fees. This is something to discuss with your accountant.
Keep Those Records!
To claim rental management fees and other expenses, you’ll need to keep clear records, including:
- Invoices from your property manager
- Monthly or annual rental statements
- Receipts for any other rental expenses
Having these documents on hand will make things much easier when it comes to filing your tax return and will keep you covered if the IRD ever asks to see proof.
Final Thoughts
Rental management fees are not only a smart investment in saving you time and stress, but they can also help reduce your tax bill. If you’re a landlord in Rotorua, it’s well worth checking that you’re claiming everything you’re entitled to come tax time.
And if managing your rental is starting to feel like a hassle? That’s where we come in.
Need a Property Manager in Rotorua?
At Rotorua Rentals, we help local landlords take the stress out of property management, and our fees are tax deductible too! Get in touch with us today to find out how we can help you get the most from your investment property.
