Surveying fees...deductible?

[richard56]

Hi
If you are going to knock down your old rental and build a new rental in it's place.
Would the cost of surveying the building site be a Capital expense or deductable?
Thanks
Richard

[mrsaneperson]

I would say they should be deductible the same as legal fees are when purchasing a property to rent out.

[richard56]

Hi
So what about the Building Consent Fees and Resource Consent fees?
I will need to get both to do the rebuild.
Would they be...just part of the cost of the building so a capital Expense or part of the cost of running a rental...deductible?
Thanks
Richard

[Wayne]

I would say they should be deductible the same as legal fees are when purchasing a property to rent out.

Legal fees are a specific direction from IRD.
I'd say capital.

[Wayne]

Hi
So what about the Building Consent Fees and Resource Consent fees?
I will need to get both to do the rebuild.
Would they be...just part of the cost of the building so a capital Expense or part of the cost of running a rental...deductible?
Thanks
Richard

Capitalise but I'm not an accountant (though it is how it has been treated for me in the past).

[mrsaneperson]

According to IRD you can claim legal expenses 10k or less per year , this is from their website:

Legal fees

Ordinarily, you can’t claim a deduction for legal expenses incurred in buying or selling a rental property, as these are capital expenses. However, where your total legal fees for the year are $10,000 or less, you can claim a deduction for legal expenses involved in buying a rental property. If you’re in the business of providing residential rental accommodation, you can also claim legal fees incurred in selling a rental property.
Note

We previously advised on this page and in other material that you can’t claim legal expenses incurred as part of buying a rental property unless you are in the business of renting properties. Inland Revenue has now determined that this is incorrect. If you relied on our previous advice, you can request an amendment to an assessment under section 113 of the Tax Administration Act 1994. Please see SPS 16/01 – Requests to amend assessments for more information on section 113 requests.

[Wayne]

According to IRD you can claim legal expenses 10k or less per year , this is from their website:

Legal fees

Ordinarily, you can’t claim a deduction for legal expenses incurred in buying or selling a rental property, as these are capital expenses. However, where your total legal fees for the year are $10,000 or less, you can claim a deduction for legal expenses involved in buying a rental property. If you’re in the business of providing residential rental accommodation, you can also claim legal fees incurred in selling a rental property.
Note

We previously advised on this page and in other material that you can’t claim legal expenses incurred as part of buying a rental property unless you are in the business of renting properties. Inland Revenue has now determined that this is incorrect. If you relied on our previous advice, you can request an amendment to an assessment under section 113 of the Tax Administration Act 1994. Please see SPS 16/01 – Requests to amend assessments for more information on section 113 requests.

Correct.
You said

I would say they should be deductible the same as legal fees are when purchasing a property to rent out.

and I suggest that surveyor fees aren't the same as legal fees as they have the treatment as you show (which doesn't mention surveyors)

[Rosco]

Hi
If you are going to knock down your old rental and build a new rental in it's place.
Would the cost of surveying the building site be a Capital expense or deductable?
Thanks
Richard

Hi Richard, General question to ask yourself, Is it a normal , ongoing cost of the rental? Or is it a one off cost, associated with buying a property, or the building of a property? - this doesn't cover everything but should give you an idea

- So survey costs for section - cost of new section, capitalise and not claimable. Not a chattel you can depreciate either
- Resource consent and building consent - cost of new section or new house, capitalise and not claimable. Not a chattel you can depreciate either
- Legal would normally fall under the same, but there is a specific section that makes it deductible if under $10k per year, and still relates to business.

Ross

[richard56]

Hi
Thanks Rosco.
That is what I was thinking...one off cost.

As for Legal Cost...what would you take on this statement be.?

"A person can deduct business-related legal expenses when their total legal expenses incurred in an income year are $10,000 or less. This applies even if the legal expenses are capital in nature, as long as the expenses have a sufficient connection with deriving assessable income. Legal expenses are defined as fees for legal services rendered by a person who holds a practising certificate issued by the New Zealand Law Society or an Australian equivalent only."

Thanks
Richard

[mrsaneperson]

Is there a way the surveying fees could be regarded as part of the legal costs?

[Wayne]

Is there a way the surveying fees could be regarded as part of the legal costs?

Only if the lawyer was doing the survey.
They are totally different lol

[Wayne]

Hi
Thanks Rosco.
That is what I was thinking...one off cost.

As for Legal Cost...what would you take on this statement be.?

"A person can deduct business-related legal expenses when their total legal expenses incurred in an income year are $10,000 or less. This applies even if the legal expenses are capital in nature, as long as the expenses have a sufficient connection with deriving assessable income. Legal expenses are defined as fees for legal services rendered by a person who holds a practising certificate issued by the New Zealand Law Society or an Australian equivalent only."

Thanks
Richard

Legal fees have to be from a lawyer - a real one.
I couldn't bill you saying I'm a lawyer (which I'm not) and make it deductible.
I think they forsaw a scam in the making.

[Rosco]

Hi
Thanks Rosco.
That is what I was thinking...one off cost.

As for Legal Cost...what would you take on this statement be.?

"A person can deduct business-related legal expenses when their total legal expenses incurred in an income year are $10,000 or less. This applies even if the legal expenses are capital in nature, as long as the expenses have a sufficient connection with deriving assessable income. Legal expenses are defined as fees for legal services rendered by a person who holds a practising certificate issued by the New Zealand Law Society or an Australian equivalent only."

Thanks
Richard

Sorry not sure what you are asking. I included this in my comment above

Legal would normally fall under the same, but there is a specific section that makes it deductible if under $10k per year, and still relates to business.

[richard56]

Hi
Sorry what I mean is ..do you agree with their interpretation of what a business-related legal expenses is?

"Legal expenses are defined as fees for legal services rendered by a person who holds a practising certificate issued by the New Zealand Law Society or an Australian equivalent only."

Thanks
Richard

[Wayne]

Hi
Sorry what I mean is ..do you agree with their interpretation of what a business-related legal expenses is?

"Legal expenses are defined as fees for legal services rendered by a person who holds a practising certificate issued by the New Zealand Law Society or an Australian equivalent only."

Thanks
Richard

You are asking Ross if he agrees that a lawyer has to be a real lawyer to be able to claim as legal expenses?