Depreciation for Business Assets in New Zealand
How to claim depreciation on business assets in NZ — depreciation methods, common asset rates, and the rules for vehicles, equipment, and buildings.
Published 22 February 2026 · Reviewed by NZ Tax Tools Editorial Desk
When you buy assets for your business, you generally can’t deduct the full cost in the year of purchase. Instead, you claim the cost over the asset’s useful life through depreciation. This guide explains how depreciation works for NZ businesses and self-employed individuals.
What Is Depreciation?
Depreciation is the gradual write-off of an asset’s cost over its expected useful life. It recognises that assets like vehicles, computers, and machinery lose value over time through wear and use.
Each year, you claim a depreciation deduction that reduces your taxable income, reflecting the decline in value of your business assets.
Depreciation Methods
New Zealand allows two main depreciation methods:
Diminishing Value (DV)
A percentage is applied to the remaining book value each year. The deduction is largest in the first year and decreases over time.
Straight Line (SL)
A fixed percentage is applied to the original cost each year. The deduction is the same amount every year.
Example: Computer costing $2,000
| Year | DV (50%) | SL (40%) |
|---|---|---|
| 1 | $1,000 | $800 |
| 2 | $500 | $800 |
| 3 | $250 | $400 (remaining) |
The DV method gives a bigger deduction early on, while SL is simpler and spreads the cost evenly.
Common Depreciation Rates (2025-26)
IRD sets depreciation rates for thousands of asset types. Here are some common ones:
| Asset | DV rate | SL rate | Useful life |
|---|---|---|---|
| Desktop computers | 50% | 40% | 4 years |
| Laptops | 50% | 40% | 4 years |
| Office furniture | 12% | 8% | 15.5 years |
| Motor vehicles | 30% | 21% | 6.5 years |
| Photocopiers | 30% | 21% | 6.5 years |
| Mobile phones | 67% | 67% | 3 years |
| Software (purchased) | 50% | 40% | 4 years |
You can look up specific asset rates using IRD’s online depreciation rate finder.
Low-Value Assets
Assets costing $1,000 or less (GST exclusive, if GST registered) can be fully deducted in the year of purchase rather than depreciated over multiple years. This simplifies record-keeping for small items.
Buildings
Depreciation on commercial and industrial buildings is available at a rate of 2% DV (1.5% SL). However, residential rental property buildings have a depreciation rate of 0% — meaning you cannot claim depreciation on residential rental buildings (though you can still depreciate chattels like carpets, blinds, and appliances within the property).
Vehicles
Business vehicles are depreciated at 30% DV or 21% SL. If you use the vehicle for both business and personal purposes, you can only claim depreciation on the business-use percentage.
Example: A $40,000 vehicle used 70% for business:
- Year 1 DV depreciation: $40,000 x 30% x 70% = $8,400
Records You Must Keep
For each depreciable asset, maintain records of:
- Purchase date and cost
- Depreciation method and rate used
- Annual depreciation claimed
- Adjusted tax value (book value) at year end
- Disposal date and sale price (if sold)
Disposing of Assets
When you sell or dispose of a depreciated asset:
- If the sale price exceeds the adjusted tax value, the difference is depreciation recovery income (taxable)
- If the sale price is less than the adjusted tax value, you can claim a loss on disposal