Spending money on your rental? Whether you can claim it straight away depends on one question: is it a repair or an improvement?
Inland Revenue's test
Repairs and maintenance restore a property to its previous state. They are normally deductible.
Capital improvements add to the property and make it better than it was when you bought it. You cannot claim them as an expense.
Examples from Inland Revenue
Usually repairs: replacing a broken window, fixing a hole in a wall, repainting.
Usually capital: adding a room, installing heat pumps where there were none, putting in double glazing.
What about depreciation?
Buildings are depreciated at 0%, so improvements to the building itself are generally not deductible over time either. Some items, such as chattels like carpets, curtains and appliances, can usually be depreciated. Items under $1,000 may be claimed in full in some cases - ask us before you buy.
Grey areas
The line is not always clear. A large job can include both repair and improvement work, and the timing and scale of the work matters. We look at each invoice and split it where needed.
Tips for landlords
Keep every invoice, with a short note of what was done and why
Ask your tradesperson to show repair and new work separately on the invoice
Take before and after photos of larger jobs
Talk to us before a big renovation, not after
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.
