How to lower Tax on Rental Property List when in your Personal name

[Anthonyacat]

Hi Eugene

There is no grey area. If an item is related to your rental activity and costs less than $500 it is deductible. Known as a de minimis exemption to the capitalisation rules.

See my first PT post for details: http://www.propertytalk.com/forum/sh...ht=#post320607

[Wayne]

Capital items less than $500 are expensed.
I made the mistake of buying a dishwasher for $500 - had to depreciate.
$499.99 and I could expense.

[Anthonyacat]

Hate to be pedantic (not really, am an accountant after all) but you could have expensed that dishwasher.

Per IRD Website:
Low-value assets, that is, assets that cost $500 or less, are deductible in the year they are acquired or created...

[Wayne]

Hate to be pedantic (not really, am an accountant after all) but you could have expensed that dishwasher.

Per IRD Website:
Low-value assets, that is, assets that cost $500 or less, are deductible in the year they are acquired or created...

Not being pedantic at all - best to get these things right.
So my accountant put me wrong!
Mutter mutter.

[Anthonyacat]

If that was the last straw, you know where to find me.

[Eugene]

Hi Eugene

There is no grey area. If an item is related to your rental activity and costs less than $500 it is deductible. Known as a de minimis exemption to the capitalisation rules.

See my first PT post for details: http://www.propertytalk.com/forum/sh...ht=#post320607

Thanks!!! !

[Eugene]

If that was the last straw, you know where to find me.

Where are you?
Other than here
Like physically.
Auckland?

[Perry]

Please use the Forum's PM facility
to exchange any contact details.

Perry
Moderator

[Anthonyacat]

Thanks for the tip, Perry. Will do.

I'm based in Auckland (South, Papakura-ish) but am currently in London for a couple years. Still doing accounts for a few people, but not seriously attempting to grow; most people probably aren't fully comfortable with the idea of their CA being on the other side of the world.

PM me for anything further

Anthony

[iwik]

Two questions ?

#1 - Does the IRD allow paying income tax through a revolving credit account
and then claiming the interest charged in your return ?


#2 - On average how much do you claim for Vehicle and office expenses ?


Cheers

iwik

[Anthonyacat]

Interest on borrowing for the purposes of paying income tax is a deductible expense, yes. Be aware of using revolving credit accounts though, if there is any personal expenditure going through it it makes things very complicated.

There can be no averages for expenses; depends how much you use your vehicle/office. There needs to be a reasonable commercial justification for your claims. The best commercial justification is that it is calculated from actual use, rather than an arbitrary allowance.

[iwik]

Cheers Anthony - seen after I paid with the RC you can pay by credit card - next time

[speights boy]

If you don't have cash to pay your tax bill, why would you want to use expensive debt such as a CC ?

[iwik]

If you don't have cash to pay your tax bill, why would you want to use expensive debt such as a CC ?

Its taking advantage of up to 55 days free credit, then pay from the RC. (Have plenty of money to pay tax bills)

For a change put expenses through the RC for a period and pay it down with the extra I'll be receiving next month in rent increases. (Money I will not miss and my income will stay the same)

Previous outgoing dollars will be going into my saving account for the muscle car which is not as easy to explain to the IRD for tax deductions.

[Anthonyacat]

Doesn't the IRD charge a nasty fee for paying by CC? Admittedly haven't looked in a while. But generally I like to use the Amex or ANZ Cashback for everything I can, but never pay my tax with it as the benefits are outweighed by the fees. Or so I thought?

In any case, paying by CC then by RC is still completely fine, but make sure records are clear. You presumably are using a personal credit card. You don't want the IRD claiming that you're paying your private debts off using your RC facility.