Thorne Accounting has been providing specialised accounting and tax services to residential and commercial property investors since 2004.
Our mission is to provide the highest quality tax and accounting services to property investors. We are constantly fine tuning the way we work with property investors so we can provide this superior service at competitive prices.
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Articles By Tony Thorne
By: Thorne Accounting | 2015 August 13
Home and Income Can you borrow against the rental only?
If you borrow funds to purchase a rental property, the interest on those funds will be tax deductible as the funds have been used to purchase an income earning asset. If you borrow funds to purchase your own home, the interest on those funds will not be tax deductible as the funds have been used to purchase a private asset.
What about the situation where you purchase a property as a home and income. That is, a property where you live in part and rent out the other part. Funds borrowed
By: Thorne Accounting | 2015 April 20
In the past, there have been some taxpayers that would sell a property between associated companies and avoid paying the GST. The way this worked was the purchaser company would claim the GST but the vendor company would go into liquidation before paying that GST.
Clearly, the Government and the IRD didn’t like this so new rules were introduced on 1 April 2011 that made it compulsory for certain land transactions to be done on a zero-rated basis. This way there would be less risk that the IRD would miss out on their money from a property transaction involving GST.
By: Thorne Accounting | 2014 April 29
Not just any NZ company can be a look-through company (LTC). And it can be rather detrimental to your tax situation if your company no longer meets the requirements as losses can be trapped within the company and a liquidation required to preserve your tax free capital gain.
This article looks at the requirement that a LTC cannot be resident of another country.
A company may only be a LTC if it has 5 or fewer owners, is resident in NZ and is not treated as a non-resident under any double tax agreement. This can cause problems for those of you
By: Thorne Accounting | 2014 April 4
Repairs vs Assets
The costs of any repairs carried out on a property are deductible unless is it ‘of a capital nature’. Costs of a capital nature generally refer to improvements and are not deductible. Instead, improvement costs are added to the cost of the asset they improved or are depreciated as a separate chattel.
Take the common scenario of an investor replacing the bathroom in a rental property that they’ve owned for a few years at a cost of $6,000. If that cost is treated as repairs, the tax relief might be $2,000. If that cost is treated as improvements
By: Thorne Accounting | 2013 October 12
Auckland Accountants, Thorne Accounting Offers Recommendations On Chattels Valuations
• We are Auckland Accountants that recommend a chattels valuation for every residential rental property
• In November 2011, the IRD released an updated list of residential rental property chattels that can be depreciated
• Depreciation cannot be claimed on chattels unless a chattels valuation is completed
• The benefit of a professional chattels valuation will always outweigh its cost
• You can do your own chattels valuation if you can justify the value applied to those chattels to the IRD in the event of an audit
Chattels Depreciation Rules
In November 2011, the IRD released their
By: Thorne Accounting | 2013 September 25
Investing In N.Z Property As Non Residents
• The Thin Cap rules apply to non-resident individuals, trusts and companies with non-resident shareholders
• The Thin Cap rules limit the deductible interest that may be claimed if the debt percentage is more than 60% of the property cost or value
• The Thin Cap rules should be considered if:
o you have rental property in NZ and you are looking to relocate overseas
o you are a non-resident looking to purchase property in NZ
Thin Capitalisation Rules (“Thin Cap Rules”)
If you’re based overseas and have an investment property in NZ, then you need to be aware
By: Thorne Accounting | 2013 June 22
What you need to know if you are considering moving to Australia
It’s becoming more and more common for New Zealander’s to move to Australia for better job opportunities among other things. While I’m sure you have identified a number of upsides about moving to Australia, one downside is the fact that Australia has a capital gains tax.
So, if you retain property in NZ which isn’t subject to any capital gains tax in NZ, you’ll want know the rules on whether Australian capital gains tax will apply to that property once you arrive in Australia.
(1) Temporary Residents Not Taxed on
By: Thorne Accounting | 2013 March 19
New Zealand Company Tax Rate – Is It Really Attractive?
From 1 April 2011, the company tax rate in NZ has been 28%. At the same time, the personal tax rate for income from $48,000 has been 30% and from $70,000 has been 33%. So, with an apparent 2%- 5% tax saving, why wouldn’t you just allocate yourself $48,000 and leave all remaining profit in your company to reduce your tax?
Do you have the option of paying tax at the company tax rate?
Generally, if 80% of your company income comes from one source, then all profit must be allocated
By: Thorne Accounting | 2012 September 24
New Zealand Holiday Homes
When the National Party released the budget in May 2012, they signalled changes to the way holiday homes were to be treated for income tax purposes. On 13 September 2012, the government released the tax bill that contains those proposed changes.
While the tax bill is not yet finalised, I don’t expect the final version to be much different to the proposed changes in the tax bill that will come into force on 1 April 2013.
The accepted rule with rental properties is that expenses can be claimed as long as the property is “available for rent”. While
By: Thorne Accounting | 2011 December 9
(1) For commercial buildings, assets listed under the “Building Fit-out” depreciation category may still be separately depreciated
(2) Separating the fit-out cannot be done retrospectively
(3) A fit-out pool of 15% of the buildings tax value can be created on 1 April 2011 if depreciation was only claimed on the building prior to that
Can depreciation still be claimed on the fit-out for a commercial building?
Historically, many commercial and residential property investors paid for valuations to be performed when an investment property was purchased so that any chattels and fit-out could be separated from the purchase price. This would allow a much
By: Thorne Accounting | 2011 March 9
Now that loss attributing qualifying companies (LAQC) will no longer exist after 31 March 2011, I have revisited various property ownership options to determine their advantages and disadvantages for property investors going forward so that you are armed with the information to make an informed decision about the best ownership structure for your rental properties.
Before you can make a good decision about the best ownership option for your situation, you need to do three things:
(1) Complete a projected profit and loss for your rental properties to determine the amount of profit or loss that the property will make.
By: Thorne Accounting | 2010 December 4
In the May 2010 budget, the government announced it was going to make changes to LAQC’s. On the 15th of October, the government finally released the draft legislation for those changes. This article outlines those changes.
(1) There is a new tax entity called a Look-through company (LTC)
Rather than making lots of changes to the existing LAQC companies, the government has instead created a new company called a Look-through company.
(2) The end of the LAQC
The one and only major change to the LAQC rules is that any loss will no longer be attributed to the shareholders