Question 1

What is the difference between DV and SL depreciation in NZ?

Accepted Answer

Diminishing Value (DV) calculates depreciation each year on the asset's reduced book value, giving higher deductions in early years and lower later. Straight Line (SL) deducts the same amount each year based on cost. IRD publishes different rates for each method — DV rates are higher than SL because they apply to a shrinking base. You can choose either method per asset but must stick with it.

Question 2

What are IRD depreciation rates for common assets 2027?

Accepted Answer

Common 2027 IRD depreciation rates (DV / SL): cars and light vehicles 30% / 21%; computers and laptops 50% / 40%; office equipment 18% / 13.5%; commercial buildings 2% / 1.5% (return of 2% commercial allowance from 1 April 2024); plant and machinery (general) 13% / 8.5%; software 50% / 40%; office furniture 18% / 13.5%. Specific industry rates are listed in IRD's Determination DEP1.

Question 3

Can I claim depreciation on a residential rental?

Accepted Answer

From 1 April 2024, residential building depreciation was abolished — you cannot depreciate the building structure of a residential rental property. However, you can still depreciate chattels (carpets, curtains, dishwasher, fridge) and improvements (heat pumps, fences). Commercial buildings can still be depreciated at 2% DV / 1.5% SL.

Question 4

What is the low-value asset threshold 2027?

Accepted Answer

Assets costing under NZ$1,000 (single item) can be fully expensed in the year of purchase rather than depreciated over time. This is the immediate-write-off / low-value asset rule. The temporary NZ$5,000 threshold during COVID-19 ended on 16 March 2021 — current threshold is NZ$1,000.

Question 5

How is the half-year rule applied in NZ?

Accepted Answer

IRD does not use a 'half-year' rule — NZ uses a pro-rata system based on months held. Depreciation is calculated for each full month the asset was used in the business during the tax year. If you bought an asset in October (month 7 of the April-March tax year), you claim 6/12 of the annual depreciation for that first year.

Question 6

What is depreciation recovery when I sell an asset?

Accepted Answer

If you sell an asset for more than its book value, the gain (up to the original cost) is 'depreciation recovery' and is taxable income. For example, you bought a car for NZ$30,000, depreciated to book value NZ$15,000, sold for NZ$22,000 — the NZ$7,000 gain above book value is depreciation recovered and taxable. Gain above original cost is treated separately (capital gain, generally not taxable unless trader).

NZ Asset Depreciation 2027 Calculator

NZ depreciation methods — DV vs SL

2027 IRD depreciation rates for common assets

Example: NZ$30,000 car using DV method

How to use this depreciation calculator