Can I still depreciate my rental building?

No. Building depreciation is 0% for all buildings (residential and commercial) from the 2024/25 income year onwards. Previously, commercial buildings had a 2% depreciation rate restored between 2020 and 2024 as a Covid recovery measure, but that was removed in Budget 2024. Residential buildings have had 0% since 2011. You CAN still depreciate items that are not part of the building itself - chattels like carpet, curtains, appliances, heat pumps, hot water cylinders, and furniture.

What's the difference between diminishing value and straight-line?

Diminishing value (DV) applies the rate to the current book value each year, so depreciation is highest in year 1 and decreases over time. Straight-line (SL) applies a lower rate to the original cost, producing equal deductions each year. DV fronts the tax benefit (better if your marginal rate is high now); SL spreads it evenly. You choose the method when you first depreciate an asset and cannot switch for that asset. DV rates are typically about 1.5x the SL rate for the same asset life.

What is the low-value asset threshold?

Assets costing $1,000 or less (GST-exclusive) can be written off immediately in the year of purchase rather than depreciated over time. This threshold was temporarily raised to $5,000 during 2020-2021 as a Covid measure but reverted to $1,000 from 17 March 2021 onwards. The threshold applies per asset, so you can immediately expense multiple individual items as long as each is $1,000 or less. This is useful for smaller chattels like smoke alarms, individual kitchen appliances, or furniture pieces.

What counts as a chattel vs part of the building?

IRD distinguishes between items that are permanently part of the building (walls, roof, plumbing, electrical wiring - building and not depreciable) and items that are separable chattels (carpet laid over floors, freestanding appliances, removable heat pumps, furniture - depreciable). Hot water cylinders are chattels even though plumbed in. Heat pumps are chattels. Carpet is chattel even though fixed to the floor. If in doubt, ask: could this be removed and replaced without structural work? If yes, it's likely a chattel.

Do I have to depreciate chattels or can I skip it?

Technically, depreciation is mandatory - you're deemed to have claimed it whether you actually did or not. If you don't claim it now, you lose the deduction, but on sale you still have to recapture (add back as income) any depreciation recovered on chattels sold for more than book value. Most rental investors claim chattels depreciation because it creates legitimate current-year deductions - typically $2,000-$5,000 per year for a standard rental property.

NZ Rental Chattels Depreciation Calculator

Buildings can no longer be depreciated but chattels can. This calculator uses IRD general depreciation rates for 16 common rental chattel categories, supports both diminishing value and straight-line methods, and shows a multi-year depreciation schedule so you can see exactly how much you'll claim each year.

Updated April 2026 IRD DET 05/01 rates. Buildings 0% from 2024/25. Low-value threshold $1,000.

Chattel

Select chattel type Cost (GST-exclusive if GST-registered, otherwise GST-inclusive)

If cost is $1,000 or less, it can be immediately expensed (low-value asset write-off). Depreciation method Years to project Your marginal tax rate (to show tax saving)

Rates used in this calculator

From IRD DET 05/01 (General Depreciation Rate Determinations for the residential rental buildings industry):

Chattel	DV rate	SL rate	Estimated useful life

Building depreciation is 0%

From the 2024/25 income year, all buildings (residential and commercial) have a 0% depreciation rate. This was a significant change in Budget 2024. Previously, commercial buildings had 2% restored (2020-2024), and residential had been 0% since 2011. If you own a rental with existing building depreciation claimed in prior years, there's no further depreciation from the 2024/25 year onwards, but your book value doesn't change either.

Low-value asset write-off

Individual assets costing $1,000 or less (GST-exclusive) can be immediately expensed rather than depreciated. For a new rental fit-out, this often means smoke alarms, light fittings, small kitchen items, and bedroom furniture get written off on day one, while larger items (carpet, heat pump, hot water cylinder, appliances) get depreciated over their useful life.

Sources

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