NZ Rental Income Tax Calculator
Calculate tax on your residential rental property income with ring-fencing, itemized deductions, interest deductibility, and rental yield.
Mortgage interest deductibility for 2025-26: 100%
Ring-fenced rental losses from previous years that can offset this year's rental profit.
Net rental income
Tax on rental income
After-tax cash flow
| Item | Amount |
|---|---|
| Gross Rental Income ($2,500.00/month × 12) | $30,000.00 |
| Vacancy Loss (5%) | −$1,500.00 |
| Effective Rental Income | $28,500.00 |
| Net Rental Income | $28,500.00 |
| Income Tax (at marginal rate) | $3,895.50 |
| Effective Tax Rate on Rental | 13.67% |
Rental Income Tax in New Zealand
Rental income in New Zealand is taxed at your marginal income tax rate. Your rental income is added to your other income, and the incremental tax is what you owe on your rental profits.
Key deductions include operating expenses (rates, insurance, repairs, property management) and mortgage interest. Interest deductibility was reduced for residential property from 2021 but has been fully restored to 100% from 2025-26 (80% for 2024-25). New builds with a Code Compliance Certificate issued on or after 27 March 2020 were always exempt from the limitation.
Since the 2019-20 tax year, residential rental losses are ring-fenced — they cannot offset your other income (salary, business income, etc.). Losses carry forward to reduce future rental income only.
Depreciation is not allowed on residential rental buildings in New Zealand (removed in 2011).
Marginal tax rate on rental profit (2026-27)
Rental profit is added on top of your salary and taxed at your marginal rate — New Zealand has no tax-free threshold, so tax applies from the first dollar.
| Taxable income | Rate |
|---|---|
| $0 – $15,600 | 10.5% |
| $15,601 – $53,500 | 17.5% |
| $53,501 – $78,100 | 30% |
| $78,101 – $180,000 | 33% |
| $180,001+ | 39% |
Worked examples (2026-27)
Profitable rental
$31,200 rent, $8,200 expenses, $14,000 interest (100% deductible), $80,000 salary. Net rental profit $9,000; tax on it $2,970; after-tax cash flow $6,030. Gross yield 4.2%.
Loss — ring-fenced
$26,400 rent, $9,000 expenses, $20,000 interest, $70,000 salary. Deductions exceed rent by $2,600 — that loss is ring-fenced (no tax refund against salary) and carries forward to offset future rental income only.
What you can and can't deduct
| Deductible | Not deductible |
|---|---|
| Council rates & water rates | Depreciation on the building (removed 2011) |
| Landlord insurance | Capital improvements (add to cost base) |
| Property management fees | Mortgage principal repayments |
| Repairs & maintenance (not improvements) | Your own labour |
| Mortgage interest (100% from 2025-26) | Losses against salary (ring-fenced) |
Frequently asked questions
What is ring-fencing of rental losses?
Since the 2019-20 tax year, residential rental deductions that exceed rental income cannot be used to offset your other income (e.g. salary or business income). Instead, the loss is carried forward and can be offset against future residential rental income, or against taxable income from selling residential land (for example a bright-line sale). It applies to residential rental property, except your main home (more than 50% of the land used as your main home for most of the year), property held on revenue account, mixed-use assets, employee accommodation and property owned by companies that are not close companies.
Can I deduct mortgage interest on my rental property?
Yes. From the 2025-26 tax year, 100% of mortgage interest on residential rental properties is deductible. For 2024-25, 80% is deductible. New builds (Code Compliance Certificate issued on or after 27 March 2020) were exempt from the limitation, so they kept 100% in earlier years too.
What expenses can I claim on rental income?
Allowable deductions include council rates, landlord insurance, property management fees, repairs and maintenance, body corporate fees, advertising for tenants, and mortgage interest (subject to deductibility rules). You cannot claim depreciation on residential buildings.
What qualifies as a 'new build' for interest deduction purposes?
A property is a new build if its Code Compliance Certificate (CCC) was issued on or after 27 March 2020, or if it was acquired from a developer who received the CCC on or after that date. The exemption ended with the limitation rules on 31 March 2025; from 2025-26 all residential property is 100% deductible.
How do I calculate rental yield?
Gross rental yield is annual rent divided by property value (e.g. $30,000 rent ÷ $750,000 value = 4%). Net rental yield subtracts expenses from the rent first. Enter your property value in the calculator to see both figures.
How are carried-forward rental losses applied?
Ring-fenced losses from prior years are applied against your net rental income in the current year. If your current year rental income is $15,000 and you have $10,000 in carried-forward losses, only $5,000 is taxable. Any unused losses continue to carry forward.
Sources
Ring-fencing rules from IRD — Residential Rental Income. Interest limitation rules from IRD — Interest Limitation. Tax rates from IRD.
Related Calculators
Rates sourced from IRD.