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R&M on Buildings/Rental Properties - Expense or Capital?

Repairs and maintenance on buildings has always been an issue for the IRD. Are you repairing the building to get it to it's original condition, or are you doing more substantial work?

Examples of tax deductible repairs & maintenance:

-          Painting

-          Replacing carpet

-          Updating kitchen/bathroom with modern equivalents

Examples of capital repairs & maintenance (not deductible)

-          Additional rooms added

-          Getting rental property to rentable condition after purchase

-          Substantial reconstruction of whole or part of the building

It is important to keep good records for what has been done, as the IRD are known to ask for justification for high repairs & maintenance costs.

This can be a confusing area so if you are unsure of whether your work is going to be capital or not please give us a call.

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