All rental income received is normally taxable with some exceptions to income from boarders or flatmates (you can read more about this in our boarders/flatmates section)
Rental Income in advance
All rental income received in an income year is taxable in that income year. For example if your tenant has paid you rent in advance for the next two weeks on 31st March 2017, the advance payment will be taxable in the income year 1 April 2016 to 31 March 2017.
Amounts you receive for tenancy bond and pass on to the Ministry of Business, Innovation and Employment are not income. Amounts you receive from the Ministry of Business, Innovation and Employment for payment of damages, rent arrears etc, should be included as income.
Expenses you can deduct from your rental income
In a nutshell you can deduct all expenses incurred in earning the rental income which are not capital in nature. Owning a rental property you are likely to have advertising, real estate management and repair and maintenance costs, these are all deductible from your rental income.
Other expenses which you can claim include Rates and insurance, interest on home loan, Motor vehicle expenses (claim percentage depending on usage), Travel expenses, Accounting fees and depreciation.
If you’re unsure whether you’re in the business of renting property, or if you can claim an expense, contact us.