Rental Depreciation Guide — Building and Chattels Depreciation for NZ Landlords
the rental property depreciation in New Zealand. The guide covers the residential building depreciation (reinstated from the 2024-25 tax year), the chattels depreciation, the IRD-approved depreciation rates, and the tax implications for the property investors.
Residential Building Depreciation
The residential building depreciation was reinstated from the 1 April 2024 tax year at the rate of 2% per annum on the diminishing value basis for the buildings with the estimated useful life of 50 years or more. The depreciation applies to the residential rental properties and the commercial properties. The building depreciation may create or increase the tax loss from the rental activities, which can be offset against the other income subject to the Interest Limitation Rules. The depreciation recovery applies on the sale of the property if the sale price exceeds the adjusted tax value. The IRD provides the detailed depreciation rate schedules on the website.
Chattels Depreciation
The rental property chattels (the furniture, the appliances, the curtains, the carpets) are depreciable at the IRD-determined rates. The common rates: the furniture and the fittings at 10% to 40% DV, the carpets at 10% DV, the whiteware at 15% to 30% DV, and the curtains at 20% DV. The chattels must be itemised with the separate cost values for the depreciation claims. The IRD may challenge the chattels valuations that appear inflated — the independent valuation is recommended. See our Rental Income Guide → for the full list of the deductible expenses.