Having tax-deductible benefits for any asset is always a plus – and if you understand the benefits that your home renovation could provide, it will make it all the more sweeter.
Now, when it comes to renovations in Auckland, it is important that you – first and foremost – understand what you can claim and even get exemptions for.
And this is where the difference between repairs and improvements come in.
Know which updates you can claim for
Now, when it comes to repairs and improvements, it is understandable that the lines can get somewhat blurred between the two.
However, as a rule of thumb, see it in its simplest form: if something needs to be replaced due to damage, it can be considered as a repair that might not be tax-deductible.
On the other hand, though, if you are simply doing an aesthetic upgrade to a home or a rental property, this can be seen as an improvement and be tax-deductible, but this can potentially only be in the year that you sell your home.
So, how do you know whether your kitchen or bathroom renovation in Auckland counts as a repair or improvement?
Typically, home improvements for resale value can potentially be tax-deductible; however, some are more likely to be included in this bracket than others. This includes renovations such as adding a second bathroom to a home or rental property or installing a new furnace.
Also, repairs to rental properties can be tax-deductible, as they could count towards processes that contribute to the upkeep of a property.
Don’t forget depreciation
In some cases, depreciation can also count as tax-deductible, so consider any residual value elements in your home, even those that you replace during a renovation. This can come into play at especially older homes, so keep the lifespan of your depreciating areas in mind if you are renovating an older home.
Have a home office? You can potentially claim here too!
Many same-year claims for renovations in Auckland that are related to home offices can become tax-deductible, which makes it easy even more convenient for work from home employees to benefit from the repairs that they have done for their homes!
Top tip: check with a professional on what you can claim!
If you are still unsure whether you can claim for your renovations or not, it is worth it to speak with a renovation specialist in Auckland that can guide you on what you can claim for.
Do remember: you might not be able to claim for all changes made to your home, but for those that you can claim, you need to ensure that you do not miss out on a golden opportunity!
