<\/p>\n
\nSusan Edmunds.
\nPhoto: RNZ\n<\/p>\n
Got questions? RNZ has a podcast, Got questions? RNZ has a podcast, [https:\/\/www.rnz.co.nz\/podcast\/no-stupid-questions No Stupid Questions, with Susan Edmunds’.<\/p>\n
We’d love to hear more of your questions about money and the economy. You can send through written questions, like these ones, but – even better – you can drop us a voice memo to our email questions@rnz.co.nz<\/p>\n
I own one very small house on my own. If I can’t sell it (the market is terrible right now), then I will need to make the move to my new city anyway and rent there. <\/p>\n
To pay that rent, I will have to rent out my own house, because I can’t afford both rent and mortgage payments. <\/p>\n
It doesn’t make sense to me that I can’t claim the rent I’m paying elsewhere, as a tax-deductible expense against the rent I receive on my house. <\/p>\n
From my perspective, the rent I pay in my new city is the cost of making my house available for an income-earning activity (ie, renting it out).<\/p>\n
Do you know why this is the case? Is there any way to avoid ending up in a situation where I’m unable to pay rent in my new city because of the tax I’m having to pay on rental income?<\/p>\n
To answer your question, I talked to Robyn Walker, who is a tax partner at Deloitte.<\/p>\n
She said, while taxpayers earning income can generally claim tax deductions for the costs associated with earning that income, there are some limitations to that.<\/p>\n
“In particular, it is not possible to claim costs which are capital in nature (ie you cannot expense the cost of buying a new fridge for your rental property, albeit you will be able to claim a depreciation deduction) and also it is not possible to claim costs which are of a private nature.<\/p>\n
“The cost of renting and running a home that you live in to facilitate renting out the home you own is a private expense and cannot be deducted.”<\/p>\n
She said it would still be possible to claim other costs associated with the rental property, such as interest, rates, insurance and maintenance costs.<\/p>\n
This could reduce the income you earn to a much lower amount, reducing the tax you have to pay on the rent you receive.<\/p>\n
“It is also worth noting that New Zealand has residential rental ring-fencing rules which essentially prevent a taxpayer from being in a tax loss position for rental properties; so even if the rent on a property you were living in was an available deduction, which it isn’t, then the deduction might also be effectively denied because of ring fencing rules.”<\/p>\n
You might be able to improve your cash flow by making your mortgage payments interest-only. A mortgage adviser or your bank could help you look at whether that is appropriate.<\/p>\n
I am unsure of who would pay if a parent dies and has no money (at all) to cover their funeral costs? <\/p>\n
Both of my parents are divorced, in their early 80s and both are on pension only money, and one has multiple health issues, so it’s something I need to think about. <\/p>\n
It’s usually the job of the person who is the executor of the estate to organise the funeral.<\/p>\n
Citizens Advice Bureau advises that banks will release money from the person’s account to pay for one without probate or letters of administration. If the estate doesn’t have the money to cover the cost, the executor or the person who organises the funeral generally becomes liable.<\/p>\n
You might be able to apply for a Work and Income Funeral Grant, which provides up to just over $2600 to help with the costs. From what I have seen, this is unlikely to cover it all.<\/p>\n
You also might be able to apply for a withdrawal from your KiwiSaver fund if the cost is going to put you into significant financial hardship. I would use this as a last resort, though.<\/p>\n
I turn 65 in May. A friend told me I will get less on the pension as I have $85,000 in KiwiSaver. I see there is a limit of $8000 you are allowed to have? <\/p>\n
For the last few years all I read is you must save for your retirement. I made a lot sacrifices to get my KiwiSaver balance where it is. Now it appears the government penalises you? <\/p>\n
I am now thinking of moving overseas when I retire. That is possible as long as you return every six months?<\/p>\n
I think there’s a misunderstanding here. The $8000 threshold is only to apply for the accommodation supplement. You can get NZ Super no matter how much money you have in KiwiSaver.<\/p>\n
If you’re moving overseas, it’s a good idea to talk to the Ministry of Social Development before you go to make sure you know how your pension will be treated. If you don’t and you stay away for more than six months, you can end up having to pay back the whole amount you were paid in that time.<\/p>\n
My father-in-law is married but for the past 15 years his wife hasn’t been living with him she’s lives with her boyfriend, she keeps getting her mail sent to his address. <\/p>\n
Now it’s coming to crunch time and she wants money out of the house, is she still entitled to half of his house?<\/p>\n
Probably. If they were married and had children and so on, she’s likely to be entitled to a share of anything that can be deemed relationship property, even if it’s taken a while for them to get to the point of formally separating it. They will both need independent legal advice.<\/p>\n