The tax benefits of a new build

Apart from a five year Brightline test compared to the 10 year period for second hand properties, Gilligan says investors can claim chattel depreciation on a build.

“Investors can identify the new chattels and break them out and separately depreciate them.

“Also investors get the added benefit that anything related to fixing a new build is automatically classed as repairs and maintenance because they are clearly not improving the capital side of the property, just reinstating it to the previous state, which is new. In other words, the IRD can't allege that it's capital maintenance because it is just being reinstated back to the house when it was brand new.”

Gilligan outlining his views to a recent Bayleys Old vs New Property webinar says new build tax exemptions, coupled with these relatively well-known but sometimes not thought of benefits, do stack up in favour of new builds, particularly if new builds have good cash yields.