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 IRD is proposing a new law to reduce claims for losses on renting a bach.

These new rules are to be effective for the year ending 31 March 2014 or equivalent balance date.

Roughly, if gross rental does exceed 2% of the rateable value of the property then any loss can’t be set off against other income. It has to be carried forward and set off against future profits (if any) from the same source.

If rental income is less than $1000 you may be permitted to put the money in your pocket and forget about tax

The plan is to compare the days rented with the days used by you. Thus if you use the bach for 30 days and rent it for 60 days then your tax claim for expenses is two thirds.