Top FAQ’s Asked

Yes, property investment remains a solid long term strategy. While the market can fluctuate, real estate tends to appreciate over time, especially in high demand areas. Investors benefit from both capital gains (increase in property value) and rental income. Additionally, property is a tangible asset, which many people find more secure than shares or other investments. However, success depends on smart buying, good management, and a long term outlook.

Owning a rental property involves more than just the purchase price.

Key costs include:

• Mortgage repayments: Your biggest ongoing cost unless the property is mortgage free.
• Rates and insurance: Local council rates and landlord insurance are essential.
• Maintenance and repairs:  Budget for both routine upkeep and unexpected issues.
• Property management fees: Typically 7–11% of rent, but this covers tenant management, inspections, and legal compliance.
• Vacancy periods – Plan for times when the property may be empty and not generating income. Understanding these costs helps you calculate your net yield and avoid cash flow surprises.

Yes, especially if you want a hands off investment or don’t live near the property.

A professional property manager:

• Screens tenants thoroughly to reduce risk of rent arrears or damage.
• Handles rent collection and follows up on late payments.
• Manages maintenance using trusted tradespeople.
• Conducts regular inspections to ensure the property is well cared for.
• Keeps you compliant with tenancy laws and Healthy Homes Standards. This saves you time, reduces stress, and protects your investment.

Location is critical. Look for areas with:

• Strong rental demand: near universities, hospitals, or business hubs.
• Low vacancy rates: indicate a tight rental market.
• Good infrastructure: access to public transport, schools, shops, and parks.
• Growth potential: suburbs undergoing development or gentrification often see strong capital gains. Use tools like CoreLogic, REINZ data, or talk to local agents and property managers to assess an area’s performance.

Rental income is taxable, and you must declare it in your annual return. However, you can deduct many expenses, including:

• Mortgage interest (limited under current rules)
• Property management fees
• Repairs and maintenance
• Insurance and rates
• The Bright-line Test may apply if you sell the property within a certain period, taxing any capital gain. It’s crucial to work with a property savvy accountant to structure your investment efficiently and stay compliant.

The Bright-line Test is a rule that may require you to pay tax on any profit made from selling a residential investment property in New Zealand.

How long is the bright-line period?

• If you sell a property within 2 years of buying it (from 1 July 2024), you may have to pay tax on the profit.
• The clock starts from the settlement date and ends when you sign a sale agreement.

Are there any exceptions?

Yes. You won’t be taxed if:

• The property was your main home the whole time.
• You inherited the property.
• It was transferred due to a relationship split or family trust.

What is rollover relief?

This allows you to transfer property (e.g. to a trust or family member) without triggering the tax, in certain situations.

Does it apply to overseas property?

Yes, if you’re a New Zealand tax resident, the rule can apply to residential property overseas too.

What do I need to do?

If the test applies:

• You must declare the profit in your tax return.
• You may need to complete extra forms.
• If you’re overseas, withholding tax might apply at sale.

Tip: Always check with a property accountant before buying or selling. The rules can change, and the tax can be significant.

Yes, if you’re a New Zealand tax resident, the rule can apply to residential property overseas too.

What do I need to do?

If the test applies:

• You must declare the profit in your tax return.
• You may need to complete extra forms.
• If you’re overseas, withholding tax might apply at sale.

Tip: Always check with a property accountant before buying or selling. The rules can change, and the tax can be significant.

Most banks require a 35 – 40% deposit for investment properties due to Reserve Bank LVR (Loan-to-Value Ratio) restrictions. This means if you’re buying a $600,000 property, you may need at least $210,000 as a deposit. However, some lenders offer flexibility if you have equity in another property or strong financials. A mortgage broker can help you explore your options and find the best deal.

Returns come from two sources:

• Rental yield:  The annual rent as a percentage of the property’s value. A 5% yield on a $500,000 property means $25,000 in annual rent.
• Capital growth:  The increase in property value over time. For example, if your property grows from $500,000 to $600,000 in five years, that’s a $100,000 gain. Some investors prioritise yield (for cash flow), others focus on growth (for long term wealth). A balanced approach is often best.

As a landlord, you must:

• Comply with the Residential Tenancies Act:  Covering rent increases, notice periods, and tenant rights.
• Meet Healthy Homes Standards:  Ensuring the property is warm, dry, and safe (e.g., insulation, heating, ventilation).
• Maintain the property:  Fix issues promptly and keep it in good condition.
• Respect tenant privacy:  Give proper notice before inspections or repairs (48 hours). Failing to meet these obligations can lead to fines or disputes. A property manager can help you stay on top of these requirements.

Here’s a step by step guide:

• Set your goals:  Are you after cash flow, capital growth, or both?
• Get pre approved:  Talk to a mortgage broker or bank to understand your borrowing power.
• Research the market:  Look at suburbs, yields, and growth trends.
• Build your team: Include a lawyer, accountant, and property manager.
• Start small:  Consider a single family home or townhouse in a growth area.
• Run the numbers:  Make sure the property is financially viable.
• Make an offer:  Once you’ve found the right property, move quickly and confidently.