House renovation

[rich hand]

I lived in NZ for a couple of years but only renting, back in the UK at present but when back in NZ I want to buy.

In the UK property renovation can be profitable and im wondering how it compares in NZ ie. if I bought a property in need of modernisation would I sell for a profit later on when reselling?

[topcat83]

Originally Posted by rich hand

In the UK property renovation can be profitable and i'm wondering how it compares in NZ ie. if I bought a property in need of modernisation would I sell for a profit later on when reselling?

Possibly - but if you are buying specifically to renovate for a profit, then you will be taxed on the profit.

Consider buying to rent first - the tax breaks on this are much more lucrative.

[rich hand]

Originally Posted by topcat83

Possibly - but if you are buying specifically to renovate for a profit, then you will be taxed on the profit.

Consider buying to rent first - the tax breaks on this are much more lucrative.

Well it wouldn't be specifically to renovate since we would have lived in it for atleast a year.

Are the tax breaks your talking about on the rent or on the property sale following a rental period?

Thanks

[topcat83]

Originally Posted by rich hand

Well it wouldn't be specifically to renovate since we would have lived in it for at least a year.

Are the tax breaks your talking about on the rent or on the property sale following a rental period?

Thanks

If you buy a property for rental, then the house and contents (but not the land) are depreciated each year. This means that generally - on paper - you make a loss over the year.
Unlike UK tax rules, You can offset the loss against the income tax you pay. Very nice.
If you eventually sell a rental property there's no tax on the profit either.

If you're buying to live in then renovate then I think you're OK with the tax on profit. They don't like people who buy houses with the sole intention of renovating then selling immediately.