Offsetting losses upon returning to NZ

Question from Charlotte Small updated on 11th April 2007:

I've lived abroad for the last 10yrs. I've bought 5 properties over the last 5yrs in NZ and they are bought under my name. When I get back to NZ this year can I move them all to LAQC and claim 5yrs worth losses against my new income in NZ? If I can't do that, I assume I can move them all to LAQC on my return and claim depreciation on buildings/chattels as if it was year one?

Our expert responded:

I am assuming that you have been treating your properties as rentals from the time that you bought them. If this is the case, you will have to do accounts for the properties since purchase through your personal tax return. There is in fact no reason to transfer the properties to an LAQC in order to be able to offset the losses against your NZ income. Assuming you have been treating the properties as rentals since you bought them, you will have accumulated losses bought forward anyway (largely from the chattel depreciation assuming the depreciation was claimed correctly in the first place) and these can be offset against any NZ income until such time that the losses are used up. In circumstances such as this, it is important to seek advise from an accountant experienced in this area as there are some pitfalls that could cause some very real problems and upset your ability to claim the maximum amount of depreciation.

Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.


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