Many investors ask whether they should own rentals personally, in a company, a look-through company (LTC) or a trust. Each option is taxed differently. Here is the tax side in plain English - legal and asset protection questions need a lawyer.
The main options
Personally or jointly: rental profit is added to your other income and taxed at your personal rates. Each co-owner reports their share on an IR3R.
Company: the company tax rate is 28%. The company files its own return (IR4).
Look-through company (LTC): the company files an IR7, but income and losses flow through to the owners, who are taxed on their share.
Trust: trustee income over $10,000 is taxed at 39% from the 2024-25 year. Trustee income of $10,000 or less (after expenses) stays at 33%. Trusts file an IR6.
Ring-fencing still applies
The residential rental loss (ring-fencing) rules apply to individuals, partners, LTC shareholders, shareholders in close companies and trustees. Using a structure does not usually get around them. Property owned by a company that is not a close company is outside these rules.
Interest rules
From 1 April 2025, 100% of interest on residential rental loans can be claimed. Close companies must apply the residential interest rules; most other companies whose main business is not residential land are excluded.
Bright-line and the main home
The bright-line test applies whoever owns the property. A home held in a trust can qualify for the main home exclusion only in limited cases, depending on the beneficiaries and the principal settlor.
Before you change ownership
Moving a property into a new structure can have tax, GST and legal effects. Talk to us and your lawyer first - we explain the tax effect of each option so you can decide with your adviser.
Need help? Yugraj CA is a Chartered Accountant (CA) firm helping property owners across New Zealand, fully online. Call 021 0234 6659, email ysm@yugrajca.co.nz, or see our property accounting services.
Disclaimer: This article is general information only, based on Inland Revenue guidance as at October 2026. It is not tax, legal or financial advice for your situation, and tax rules can change. Please talk to us, or another qualified adviser, before acting. Yugraj Singh Mahil Chartered Accountants Limited does not provide financial, investment or mortgage advice. Last reviewed: October 2026.
