IR3R form — Rental income schedule
The rental property schedule that attaches to an IR3 return, setting out income and expenses per property.
The three things that matter
| Attaches to | Your IR3 return, one schedule per property |
|---|---|
| Losses | Residential rental losses are ring-fenced — they carry forward, they do not offset salary |
| Interest | Only the interest portion of a mortgage payment is ever deductible, and only as the interest limitation rules allow |
Who needs to complete it
- Anyone who received residential or commercial rental income during the tax year and files an IR3.
- Owners of a property let out part-year, including short-stay accommodation that is not run as a GST-registered business.
- Co-owners, who each return their own share rather than one owner returning the lot.
Filling it in, section by section
Property details
Address and your ownership share. Co-owners return their share of both income and expenses in the same proportion — you cannot allocate all the expenses to the higher earner.
Rental income
Gross rent received during the year, plus recoveries such as insurance payouts for lost rent and tenant charges for damage beyond the bond.
Expenses
Rates, insurance, repairs and maintenance, property management fees, and interest subject to the interest limitation rules. Improvements are capital and go into the asset's cost base rather than this schedule; the repairs-versus-improvements line is the single most-audited judgement in residential rental returns.
Net result
Income less deductions. Residential rental losses are ring-fenced — they do not offset salary or business income and instead carry forward against future residential property income.
Filled in: a worked example
Priya let one residential property for ten months of the year; it sat unavailable for the other two while she used it herself.
| On the form | What goes in it | Why |
|---|---|---|
| Period the property was available for renting | 10 months | This one box does real work. Ongoing expenses — rates, insurance, interest, depreciation — are then claimed at 10/12. |
| Boxes 1 to 4 — Income | Rent in Box 1; an insurance receipt or rates refund in Box 2; any gain or loss on disposal in Box 3 | Boxes 1, 2 and 3 make Box 4. If Box 3 is a loss it is subtracted rather than added, and a loss is written in brackets. |
| Box 7 — Interest | The interest portion of the mortgage payment only | Never the whole repayment. The principal is not an expense. |
| Box 9 versus Box 10 | Repairs and maintenance, kept apart from improvements | Repairs and maintenance are claimable; additions and improvements to property or plant are not — those get depreciated instead. The form asks you to explain the claim fully, on a separate note if there is not enough space. |
| Box 11 — Buildings depreciation | Usually nil | Buildings with an economic life of more than 50 years stopped being depreciable from the 2011-12 income year, so for most residential rentals this box is empty. |
| Box 15 — Net rents | Box 4 less Box 14 | Copy it straight to your return only if the property is NOT residential. For a residential property, run it through the residential property deductions worksheets (IR1226) first. |
Then what? One IR3R per property, attached to the income tax return, with a copy kept. Records stay for seven years.
What goes wrong
| Mistake | What it costs you |
|---|---|
| Offsetting a residential rental loss against salary. | Ring-fencing has applied since the 2019-20 year. The loss carries forward instead, and a return that offsets it will be amended. |
| Deducting the full mortgage payment. | Only the interest portion is ever deductible, and only to the extent the interest limitation rules allow. Principal repayments are not an expense. |
| Treating a renovation as repairs. | Work that improves the property beyond its original condition is capital. Claiming it as maintenance is the most common reason a rental return gets adjusted. |
| Ignoring private use of the property. | Periods of private or family use have to be apportioned out. Holiday homes let some of the year fall under the mixed-use asset rules, which have their own formula. |
If something changes after you've handed it in
The IR3R is not a one-off. These are the situations that send you back to it, and what each one actually requires.
- You buy a second rental property
- A separate IR3R for it. One form per property, every year, each covering the year to your balance date.
- The property made a loss
- Residential property deduction rules ring-fence it. Use the IR1226 worksheets — the loss carries forward against residential property income; it does not reduce your salary.
- You do not know an asset’s depreciation rate
- Use Inland Revenue’s depreciation rate finder at ird.govt.nz/tools-calculators, or the Depreciation rates guide (IR265).
- You sold the property, or an asset in it, during the year
- The gain or loss on disposal goes in Box 3, with a loss shown in brackets.
- The property is a bach used both privately and to earn income
- The mixed-use asset rules may apply instead of a simple months-available apportionment. The Rental income guide (IR264) covers them.
Work out the numbers first
The IR3R only records a decision — these do the arithmetic behind it.
Frequently asked questions
What is the IR3R form used for?
The rental property schedule that attaches to an IR3 return, setting out income and expenses per property.
Where do I get the IR3R form?
Download the current 2026 edition straight from Inland Revenue: IR3R PDF on ird.govt.nz. Attach it to your IR3, or complete the equivalent rental section in myIR. Use a separate IR3R for each property rented out; each one covers the year to your balance date.
Offsetting a residential rental loss against salary — what happens?
Ring-fencing has applied since the 2019-20 year. The loss carries forward instead, and a return that offsets it will be amended.
Deducting the full mortgage payment — what happens?
Only the interest portion is ever deductible, and only to the extent the interest limitation rules allow. Principal repayments are not an expense.
Treating a renovation as repairs — what happens?
Work that improves the property beyond its original condition is capital. Claiming it as maintenance is the most common reason a rental return gets adjusted.
Ignoring private use of the property — what happens?
Periods of private or family use have to be apportioned out. Holiday homes let some of the year fall under the mixed-use asset rules, which have their own formula.
How do I change my IR3R after I've handed it in?
A separate IR3R for it. One form per property, every year, each covering the year to your balance date. Most changes work the same way — see the full list of triggers on this page.
Other IRD forms
IR330 — Tax code declaration
Tells your employer which tax code to use so the right amount of PAYE comes out of each pay.
IR330C — Tax rate notification for contractors
Tells the payer what withholding rate to deduct from schedular payments to a contractor.
KS2 — KiwiSaver deduction form
Tells your employer which KiwiSaver contribution rate to deduct from your pay.
IR526 — Tax credit claim form (donations)
Claims the donation tax credit for gifts of money made to approved donee organisations.
IR334 — Employer registration
Registers a business as an employer so it can file payday returns and pay PAYE.
See the IRD forms index, or browse every form on ird.govt.nz.