If you own a rental property then you should be familiar with the chattel and the useful life of chattels in the property. Chattels refer to removable items that are not fixed to the property that can be depreciated separately e.g. fridge, stove, dishwasher, blinds, carpets, and curtains, just to name a few.

All chattels have a shelf life and it is a landlord’s responsibility to ensure that chattels are maintained to a reasonable state of repair. The requirement to replace any chattels will be dependent on the condition of the item. Each chattel has what is called an ‘estimated useful life’, meaning how many years the depreciable asset is estimated to be operational/valuable.

Landlords should be aware that the Tenancy Tribunal base claimable values on the IRD depreciation rates and insurance guides. Below is a table on some of the estimated useful life of different chattels you may find in a rental property. Chattels as a default class have an estimated useful life of 5 years, but this varies greatly when looking at specific items.

There is a chattel guide provided by IRD, known as the General Depreciation Determination DEP 80: Residential Rental Property Chattels. Although below is only a small sample of what is included, you can view the entire list here. This guide helps to show what our Property Managers work to if they need to put in a claim for damage or excessive wear and tear.

https://www.taxtechnical.ird.govt.nz/en/determinations/depreciation/general/dep-80-residential-rental-property-chattels

What is depreciation?

Depreciation is an accounting method that allows a loss in value and deduction for the cost of an asset spread over the useful life of the asset. In the case of chattels, they lose value over time as they get older and therefore the loss of value attributes to the estimated useful life.

What can you depreciate on a residential rental property?

To help understand what you can depreciate, ask yourself if the item is part of or attached to the building.

The following items are excluded from being depreciated separately to the building; plumbing and piping, electrical wiring, internal walls, doors (internal and external), garage doors (where the garage is part of the residential rental building), kitchen cupboards, bathroom fittings and furniture (toilets, baths, showers, mirrors attached to the walls, built in bathroom cabinetry), linoleum and tiles (wall and floor).

However the following items are allowed to be depreciated separately from the residential rental building; wardrobes and cupboards (not built into the walls), carpets, curtains, blinds, water heaters, hot water cylinders, air conditioning and heating.

Chat to a professional accountant if you have any questions over depreciation for your rental property, or visit the IRD website for more information: https://www.ird.govt.nz/depreciation

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