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Depreciation Solutions

Many investors are leaving money on the table.

As a property investor you are legally entitled to claim the depreciation of your investment property against your taxable income, enhancing cash flow.

Our partners at Valuit are market leaders in the niche area of depreciation for property investors and are the only New Zealand company specialising in the full apportionment of residential rental properties for depreciation.

Valuit's aim is to ensure the full depreciation potential is realised on your property investment portfolio by:

  • Increasing your cash flow by allowing greater tax write-offs against income received from your investment property / properties.
  • Maximising your depreciation claim by determining all appropriate depreciation categories for your property / properties.
  • Minimising depreciation recovery with the implementation of a comprehensive apportionment at purchase.
  • Allowing consistent reporting methods through custom-designed depreciation software.
  • Meeting IRD requirements through continual research of best practices.
  • Reducing the risk of IRD penalties through compliant methodologies.
  • Providing a comprehensive depreciation report that forms the basis of the depreciation schedule for the property and can be used throughout the years of ownership. No further yearly reports or costs are involved.

Step 1. Estimate your tax savings*

*Disclaimer: Values shown in this summary are estimates only. All care has been taken to provide figures that are as accurate as possible.

Step 2. Order your depreciation report

Get your report now

Valuit will prepare your depreciation report, providing a detailed description of your investment property, outline the claimable deductions you are entitled to and maximise your tax savings.

The cost of the depreciation report will depend on your property type:

House: $400 + GST
Unit, Townhouse: $400 + GST
Apartment: $450 + GST

Frequently Asked Questions

Just like you claim wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of your investment property against your taxable income.

There are two types of allowances available: depreciation on Plant and Equipment, and depreciation on Building Allowance.

Plant and Equipment refers to items within the building like ovens, dishwashers, carpet & blinds etc. Building Allowance refers to construction costs of the building itself, such as concrete and brickwork.

Both these costs can be offset against your assessable income.

You only need one depreciation schedule for each property that you own.

You should get a depreciation report commissioned as soon as possible after buying a property so that you can maximise the depreciation benefits that your Accountant can claim for you as part of your annual tax return.

Once the report is done and your Accountant has set up the asset values and depreciation schedules in your accounts the depreciation for each year can be calculated without needing to get any further deprecation reports for that property.

Simple. A depreciation schedule will help you pay less tax. The amount the depreciation schedule says you claim effectively reduces your taxable income.

Depreciation is known as a "non-cash deduction" because it's the only deduction that you don't have pay for on an ongoing basis. The deductions are in-built within the purchase price of your property.

The cost of the depreciation report will depend on your property type:

House: $400 + GST
Unit, Townhouse: $400 + GST
Apartment: $450 + GST

Each property is different and many varying factors must be considered when preparing a property depreciation schedule. With this in mind, please use the Depreciation Calculator to give you an estimate of potential deductions.

The valuation completed by Valuit is completely different to a Registered Valuation or Rating Valuation (Old Government Valuation). Valuit completes an apportionment of your property's purchase price into all of the various assets for depreciation. To enable Valuito do this they must apply a formula that is set by IRD to determine the split between Land and Improvements (Buildings, carpets etc).

This formula uses a Registered Valuation or Rating valuation. Valuit are required by IRD to use the valuation that is most current prior to purchase. Valuit cannot use a valuation completed after purchase.

If you did not have a Registered valuation completed Valuit can use the Rating Valuation and if you do not have a copy of this Valuit is able to obtain these records for a nominal fee.

There are two ways that a house is normally built.

The first is paying a building contractor a contract price to build the house on a piece of land. In this situation Valuit apportions the contract price into the various asset categories. Any items that you have purchased over and above the contract price must be recorded separately by your accountant. These items are claimed based on your receipted costs. Valuit must be made aware of any items over and above the contract price.

The second situation is where you build the house and actually manage the project paying individual contractors etc. In this instance your depreciation will be based on each individual invoice and it is a matter of allocating the invoices to the correct depreciation category. This can be done very simply by yourself and your accountant. Where you have paid for labour or items and do not have a receipt you will not be able to include these costs for depreciation.

Some of it you may. Depreciation is allowance for assets decreasing in value due to use. For many of the items such as carpets and blinds it is obviously that these items do decrease in value and depreciation can generally be minimised on assets such as these.

If there has been a significant increase in the value of your property during your ownership it will be harder to show that some other items such as the Building itself has decreased in value. The reason that most properties increase in value is due to the demand for land and location. Depreciation should be viewed as a bonus and any depreciation repaid can be viewed as an interest free loan. Think of this also, what will $100 buy you today and what will it buy you in 15 years? The time value of money is also an important point to note.

Renovations undertaken to the property prior to our inspection can cause problems. Depreciation is based on what you pay for the property and therefore Valuit is completing its apportionment of the property as at the date of settlement.

Consequently Valuit must complete its inspection based on the property as it was prior to any renovations.

If it is minor cleaning and painting there is no major issue as long as Valuit is informed. If there has been replacement of assets such as carpets, lights etc than this can cause problems. To enable Valuit to complete the report in this instance they must have proof of what the asset was like. This could be in the form of photos, video, or even the removed asset.

Valuit must ensure that it excludes these items as they are in addition to your purchase price. Any cost incurred in completing renovations etc must be provided to your accountant who will incorporate them into your accounts accordingly, this will also ensure that you get the correct write offs for the items you have replaced.