You’re Missing Out on Tax Savings If You Haven’t Had a Chattels Valuation Done

We’ve been recommending chattels valuations from Valuit for over 20 years, and it still amazes us how many property investors haven’t had one completed.

If you own a rental property and your current accountant hasn’t discussed chattels valuations and depreciation with Valuit, there’s a very good chance you’re paying thousands of dollars more tax than you need to over the life of the property.

In our view, claiming depreciation on chattels is one of the best (if not the best) tax‑saving strategies available to rental property owners.

What Can Still Be Depreciated?

Many investors are surprised to learn that you can still depreciate items such as:

• Carpets
• Curtains and blinds
• Stoves and rangehoods
• Heat pumps
• Dishwashers
• Other removable fixtures and fittings

Since 1 April 2011, there has been no building depreciation for residential properties, which makes chattels depreciation even more important. For commercial property owners, there are even more assets available for depreciation, making the benefit even greater.

Real Client Results

Looking back at a few recent client examples highlights just how powerful this can be:

Client 1 – Three residential rentals

• Total chattels depreciation claimed: $79,001
• Approximate tax saved: $26,000
• Cost: ~$500 per property ($1,500 total)
• Return on investment: 1,733%

Client 2 – One rental, recently sold

• Chattels depreciation claimed: $30,969
• Tax saved: $10,219.77
• Equivalent building depreciation would have been ~$7,000, but this would have been recovered on sale.
• Chattels have actually reduced in value, so no depreciation recovery on sale.

Client 3 – Simple commercial fit‑out

• Chattels depreciation claimed: $52,102
• Approximate tax saved: $17,000
   

Common Questions We’re Asked

1. When should a chattels valuation be done?
Ideally, as soon as the property is purchased and before the first tax return is filed. If returns have already been lodged, it can be trickier, as IRD isn’t keen on changing from a “building only” approach to splitting out chattels, but that doesn’t mean it can’t be done.

2. Can I do it myself?
No. A chattels valuation must be completed specifically for tax purposes, not as a general valuation. Many assets are difficult to value accurately. Valuit generally identify more assets, apply higher (but justified) values, and can defend their work if IRD ever challenge it.

3. Can I use a normal valuer?
We wouldn’t recommend it. This is a specialist area, and we only recommend Valuit.

4. Can a builder provide a chattels list for new builds?
We generally try to avoid this. Builders are focused on construction, not tax depreciation. Valuit understand the tax rules, identify more assets, and generally achieve higher, defensible values.

5. “I don’t believe in depreciation” or “I’ll just have to pay it back later”
Both of these statements are incorrect. They usually come from outdated advice or people unfamiliar with the current rules. There is no downside to chattels depreciation, as chattels wear out, you claim more depreciation, reduce tax each year, and there’s typically no recovery on sale.

6. Is it worth it for an older, run‑down property?
Start with the “big five”: carpets, curtains, dishwasher, stove/rangehood, and heat pumps. If you think these alone would exceed $4,000, it’s usually worth it. If unsure, a conversation with Valuit is very helpful.

7. What does it cost?
Approximately $500, depending on the property.

8. Is it worthwhile for commercial properties?
Absolutely. Commercial properties typically have far more depreciable assets, resulting in much larger tax benefits.

9. Fully furnished or Airbnb properties?
Even more assets = even more depreciation. These properties benefit significantly from a chattels valuation.

Cost vs Benefit Example

Valuit charge around $475 + disbursements + GST for a Single Tenancy Dwelling.

The benefit depends heavily on the property. Newer properties typically have higher chattel values.

Example – $10,000 of carpet:

• Without a chattels valuation: included in the building → no depreciation
• With a chattels valuation: depreciable at 25% ($2,500 per year)
• On a 30% tax rate, that’s a $750 tax saving in the first year alone

In many cases, the valuation cost is fully recovered within the first year.

Valuit Contact Details

Freephone: 0508 482 583
Website: www.valuit.co.nz 

If you haven’t depreciated your chattels, email ross.barnett@lifetime.co.nz  and we’ll see if there’s something we can do to help.

This article is for general information only and is not intended as accounting, tax, or financial advice. You should seek advice from a qualified professional before acting on any information provided.

Any examples or figures are for illustration purposes only and should not be relied on for decision-making.