• Login:
Welcome, Register Here
follow PropertyTalk on facebook follow PropertyTalk on twitter Newsletter follow PropertyTalk on LinkedIn follow PropertyTalk on facebook
Results 1 to 3 of 3
  1. #1
    Join Date
    May 2004
    Posts
    2,837

    Default Question - Cost incurred in prepping a rental for sale

    I know that costs incurred soon after buying are capitalised but is the reverse true? Currently tidying up a rental for sale - maintenance, (part) redec in and out, general flossying up - and am assuming costs can be expensed. Is that correct?

    Also I realise that costs in the year of sale will need to be pro rated, but are there exceptions to that? Also that there will be some building depreciation recovered, maybe a little bit of chattels depreciation recovered as well, so have budgeted for that.

  2. #2
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,632

    Default

    Hi,

    By your question it sounds like you already know the answer, but just don't want to admit it. Generally costs related to preparing for sale are not repairs, so not deductible. The true test is whether you are tenanted of not. If your tenant has moved out, and you are now renovating for sale, these expenses won't be deductible!

    Rates - once tenant moves out, not deductible if preparing for sale
    Insurance - same
    Interest - still claimable as specific section in income tax act covers interest, so slightly different rules. This is similar for purchase

    Depreciation recovery on building - in some cases can reduce this and worth checking out. https://cswaikato.co.nz/index.php/la...n-auckland/131

    Depreciation recovery on chattels - generally chattels do wear out, so generally no recovery. Could get a Valuit chattels valuation to prove no recovery.

    Legal fees - I think IRD indicate no, but not sure I agree with that :-)

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  3. #3
    Join Date
    May 2004
    Posts
    2,837

    Default

    Thanks for the answer and link Ross. The property will be rented up to settlement day, when the tenants switch over to be the owners.

    Some work is repairs, some maintenance. Interior redec I regard as maintenance as well overdue and has been quietly going on all year, working around tenants which they are OK about in the circs.

    Had a Valuit report when property bought, that was 15 years ago and most original chattels have nil book value now.


 

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. Rental income question
    By Sam3000 in forum Property Investment (NZ)
    Replies: 27
    Last Post: 29-05-2019, 11:15 PM
  2. Method of sale question?
    By richard56 in forum Property Investment (NZ)
    Replies: 9
    Last Post: 30-03-2018, 11:58 PM
  3. Replies: 3
    Last Post: 19-10-2017, 07:43 PM
  4. Interest Incurred during construction of an Investment property
    By saleemn in forum Finance, legal and tax (NZ)
    Replies: 5
    Last Post: 17-08-2016, 01:44 PM
  5. Replies: 23
    Last Post: 09-08-2015, 02:00 PM
  6. help about refinancing question home to rental
    By jaybnz in forum Finance, legal and tax (NZ)
    Replies: 10
    Last Post: 01-12-2011, 09:32 AM
  7. Recommendation wanted for cost effective garage door for rental
    By Pegasus in forum Property Investment (NZ)
    Replies: 3
    Last Post: 08-03-2011, 04:59 PM
  8. Replies: 2
    Last Post: 12-09-2008, 06:04 PM

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •