Income tax on rent, worked example, in New Zealand
| Non-resident couple's joint monthly rental income1 | US$1,500 | US$6,000 | US$12,000 | |
| Annual Rental Income | 18,000 | 72,000 | 144,000 | |
| Less Costs2 | (4,395) | (15,715) | (33,041) | |
| Less Depreciation3 | (12,000)4 | (25,000)5 | (57,600)6 | |
| = Taxable Income | 1,605 | 31,285 | 53,359 | |
| Income Tax Rates | ||||
| Up to NZD 14,000 | 10.50% | 169 | 980 | 980 |
| NZD14,000 - NZD 48,000 | 17.50% | - | 6,586 | 3,967 |
| NZD48,000 - NZD 70,000 | 30% | - | - | 6,408 |
| Over NZD 70,000 | 33% | - | - | - |
| Annual Income Tax Due | 169 | 7,566 | 11,354 | |
| Tax Due as % of Gross Income | 0.94% | 10.51% | 7.88% | |
| Source: Global Property Guide research |
||||
Notes
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 US$ = 1.50 NZD
3 Estimated values.Only expenses actualy incurred may be deducted such as insurance, property agent fees (approximately 8% of the rent), land rates, repairs and maintenance.
4 Typical depreciation rates for buildings are 3% on a diminishing value basis or 2% of the cost. Accordingly, the depreciation deduction available will depend on the amount of land attached to the property. In these cases, the property is assumed to be a semi-detached home and has allocated 50% of the cost price for depreciation.
4-1 Property cost is US$1,200,000; depreciation = [2% * US$600,000].
4-2 Property cost is US$2,500,000; depreciation = [2% * US$1,250,000].
4-3 Property cost is US$5,760,000; depreciation = [2% * US$2,880,000].
5 Rental income earned by nonresident individuals is taxed at progressive rates.
