Mixed-Use Assets
This is an area investors should be aware of if their property is not used as a longterm residential tenancy , or where in any given year the property is used as both a residential tenancy and a short-term holiday rental , e . g . Airbnb .
Mixed-use asset rules apply to a property which is used for both private ( by you , your family or associated people ) and income-earning use in the same tax year . It must also be unused for 62 days of that year . These rules specifically exclude residential property used as a long-term rental .
You can opt out of these rules if your property earned less than $ 4,000 in that tax year , however , you won ’ t be able to claim any expenses against this property if you choose this route .
There are three types of expenses associated with a mixed-use property :
• You can claim 100 % of expenses related to renting out your property . An example of this type of expense would be advertising the property for rent , or repairs to damage by tenants .
• You can ’ t claim any expenses that relate to the private use of your property . e . g . boats or equipment that are locked away when renting the property out .
• Finally , expenses that can ’ t be deemed private or related to renting out the property need to be apportioned . Generally this would include any interest on loans secured against the property , rates and insurance etc .
The easiest way to describe this is with the following example :
Paul owns a mixed-use property in Waihi . He used it privately for 32 days , as well as renting it out for 45 days . The expenses that can be apportioned totalled $ 11,500 .
Paul can claim $ 6,721 of these expenses against his rental :
$ 11,500 x 45 = $ 6,721 32 + 45
There are more complicated rules at play around quarantining losses and what to claim if your property was sold during the tax year .
If this raises any questions for you around the use of your own investment property , we recommend you seek the advice of a chartered accountant .
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