Gross rental yield looks great on paper but hides the real cost of owning investment property. Learn to calculate net yield in NZ and Australia, and why the gap is bigger than you think.

ProppiAI Editorial Team, "Rental Yield: The Number That Lies — New Zealand & Australia Property Gotchas", ProppiAI, 2026-04-04.

_Part 6 of the [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series._

  **Rental yield** is the annual rent from a property as a percentage of its value. **Gross yield**
  is just rent ÷ property value. **Net yield** takes out all the ownership costs first — rates,
  insurance, maintenance, management fees, vacancy. The gap between the two is where beginners get
  stung. A 5–7% gross yield often becomes 2–3% net once you do the real maths.

## Gross vs Net — Mind the Gap

### Gross Yield

> **Gross Yield = (Annual Rent ÷ Property Value) × 100**

**Example:** $600/week × 52 = $31,200/year. Property value: $650,000.

> Gross Yield = ($31,200 ÷ $650,000) × 100 = **4.8%**

### Net Yield

> **Net Yield = (Annual Rent − Annual Costs) ÷ Property Value × 100**

Now subtract what you actually pay:

| Cost                             | Annual amount |
| -------------------------------- | ------------- |
| Council rates                    | $2,800        |
| Water rates                      | $1,200        |
| Insurance (landlord + building)  | $2,400        |
| Property management (8% of rent) | $2,496        |
| Maintenance allowance            | $2,000        |
| Vacancy (3 weeks/year)           | $1,800        |
| Compliance / inspections         | $500          |
| **Total costs**                  | **$13,196**   |

> Net Yield = ($31,200 − $13,196) ÷ $650,000 × 100 = **2.8%**

That 4.8% gross just became 2.8% net. And that's before mortgage interest.

  The trap: property listings, investment seminars, and most online calculators show **gross**
  yield. The actual number — net yield — is typically 40–50% lower. Always run both before you
  commit.

## Yields Across NZ and Australia

### New Zealand (2026)

NZ [rental yields](https://www.moneyhub.co.nz/rental-yield-calculator-guide.html) vary heaps by region:

| Region                                | Typical gross yield                  |
| ------------------------------------- | ------------------------------------ |
| Auckland                              | 3.0–4.0%                             |
| Wellington                            | 3.5–4.5%                             |
| Christchurch                          | 4.5–5.5%                             |
| Regional (e.g., Hawke's Bay, Waikato) | 5.0–6.5%                             |
| Central Otago (short-term rental)     | Variable — up to 8%+ gross, seasonal |

No stamp duty in NZ, so the upfront cost base is different from Australia. But NZ landlords cop [Healthy Homes compliance costs](/blog/nz-healthy-homes-compliance-guide) that Aussie landlords don't have.

### Australia (2026)

Aussie yields (based on [CoreLogic](https://www.corelogic.com.au/) and [SQM Research](https://sqmresearch.com.au/) market data) generally run higher than NZ capitals:

| Market                              | Typical gross yield |
| ----------------------------------- | ------------------- |
| Sydney                              | 2.5–3.5%            |
| Melbourne                           | 3.0–4.0%            |
| Brisbane                            | 4.0–5.0%            |
| Perth                               | 4.5–5.5%            |
| Regional (e.g., Bendigo, Toowoomba) | 5.5–8.5%            |

But AU investors pay [stamp duty](/blog/gotchas-101-hidden-costs-new-zealand-and-australia) at purchase — often $20,000–$40,000+. When you calculate yield on the money you actually put in (including all purchase costs), the number drops again.

## The Costs That Eat Your Yield

### NZ-specific

- **[Healthy Homes compliance](/blog/nz-healthy-homes-compliance-guide)**: Heat pump ($3,000–$5,000), insulation ($2,000–$8,000), ventilation ($500–$2,000). One-off hit, but it can wipe out a year's net income.
- **Property management**: Usually 7.5–8.5% of gross rent + GST
- **Letting fee**: Up to 1 week's rent + GST each time you place a new tenant
- **[Interest limits](/blog/gotchas-101-interest-deductibility-nz)**: Mortgage interest is now fully deductible again from April 2025, but rental losses are still ring-fenced — you can't offset them against your salary

### AU-specific

- **[Stamp duty](/blog/gotchas-101-hidden-costs-new-zealand-and-australia)**: $15,000–$50,000+ depending on state and price
- **Land tax**: Annual state tax on investment property land value. Varies wildly — Vic kicks in above $50,000; NSW above $1,100,000. Could be $2,000–$10,000+/year
- **Body corporate / strata**: $2,000–$8,000+/year for units and townhouses
- **Property management**: Typically 5–10% of gross rent

### Both markets

- **Vacancy**: Even 2–3 weeks empty costs 4–6% of annual rent
- **Maintenance**: Budget at least 1–2% of property value per year
- **Insurance**: Landlord + building, typically $1,500–$3,000/year

  Before you buy, list every cost you'll actually pay in a year. Then do the net yield calc. If net
  yield dips below 2%, you're banking entirely on capital growth — and that's a bet, not a plan.
  Check our [strategies guide](/blog/gotchas-101-investment-strategies-new-zealand-and-australia)
  for when that approach makes sense.

## Cash-on-Cash Return — The Honest Number

The most brutal metric is **cash-on-cash return** — net income after mortgage payments, divided by the cash you actually put in:

> **Cash-on-Cash Return = (Net Rent − Mortgage Payments) ÷ (Deposit + Purchase Costs) × 100**

For plenty of properties, this number is **negative** in the early years. That's where [negative gearing](/blog/gotchas-101-negative-gearing-australia) (AU) or carrying the loss (NZ) comes in. You're gambling that capital growth makes up the shortfall over time.

## Tracking Real Yield Across Your Portfolio

Yield isn't a set-and-forget number. Costs shift every year — rates go up, insurance premiums bounce around, surprise maintenance hits, rents move.

For each property you need:

- **Rental income records** — actual rent received, not just what you're asking
- **Rates notices** — council and water
- **Insurance renewals** — track premium changes year to year
- **Management fee statements** — itemised expenses
- **Maintenance and repair invoices** — actual spend vs what you budgeted
- **Vacancy records** — actual days empty per year

When you own properties in both NZ and Australia (more common than you'd think — see our [New Zealand vs Australia comparison](/blog/gotchas-101-new-zealand-vs-australia)), tracking real yield across different cost structures is a proper headache. [AI document management](/blog/ai-document-management-property) can pull the financial data out of uploaded invoices, statements, and notices — so you can just ask "What's the net yield on my Christchurch flat this year?" instead of wrestling with spreadsheets.

## The Short Version

1. **Gross yield is misleading** — always calculate net yield with every real cost
2. Net yield is typically **40–50% lower** than gross
3. NZ has no stamp duty but has [Healthy Homes costs](/blog/nz-healthy-homes-compliance-guide); AU has stamp duty but no equivalent compliance bill
4. **Cash-on-cash return** — the most honest metric — is often negative in the early years
5. Track actual costs per property per year, not assumptions

For where yield sits among the other recurring decisions amateur landlords have to make, see our region-specific reality-check guides: [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand) and [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia).

_Next up: [Hidden Costs of Buying an Investment Property in NZ and Australia](/blog/gotchas-101-hidden-costs-new-zealand-and-australia)_


Australian CGT on property looks simple — sell after 12 months and get 50% off. But cost base mistakes, timing traps, and interaction with negative gearing catch investors. 2026 guide.

selling investment property tax Australia

ProppiAI Editorial Team, "Capital Gains Tax on Australian Investment Property: The 50% Discount Trap", ProppiAI, 2026-04-02.

_Part 5 of the [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series._

  **Capital Gains Tax (CGT)** is the tax you pay on the profit when you sell an investment property
  in Australia. The gain is the sale price minus your **cost base** (what you paid plus certain
  costs). Hold for more than 12 months and you get a **50% discount** — only half the gain gets
  added to your taxable income. Source: [ATO — Property and capital gains
  tax](https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax).

## The Basics

Quick example:

| Item                                | Amount       |
| ----------------------------------- | ------------ |
| Sale price                          | $800,000     |
| Less: Cost base                     | -$620,000    |
| **Capital gain**                    | **$180,000** |
| 50% CGT discount (held > 12 months) | -$90,000     |
| **Taxable capital gain**            | **$90,000**  |

That $90,000 gets lumped on top of your other income for the year. If you're already on $90,000 salary, your total jumps to $180,000 — pushing a chunk of the gain into the 37% bracket (and close to 45% territory).

  The 50% discount trap: people assume they'll pay half their normal tax rate on the gain. Nah. The
  discounted amount gets stacked ON TOP of everything else, which can push you into a higher
  bracket. The actual tax hit is often bigger than expected.

## What Goes in Your Cost Base (And What Doesn't)

Your **cost base** matters because every dollar in it means a dollar less in taxable gain.

**Counts:**

- Purchase price
- [Stamp duty](/blog/gotchas-101-hidden-costs-new-zealand-and-australia) you paid at purchase
- Legal and conveyancing fees (buying and selling)
- Agent fees at sale
- Building and pest inspections
- Capital improvements (reno, extension, new fixtures)
- Borrowing costs you haven't already claimed as deductions

**Doesn't count:**

- Costs you've already claimed as tax deductions (repairs, maintenance)
- [Depreciation](/blog/gotchas-101-negative-gearing-australia) claimed on plant and equipment — that gets added back
- Insurance, rates, and management fees already deducted year-by-year

**The trap:** Renos and improvements boost your cost base, but only if they're **capital** work. Repainting a wall the same colour is a repair (deductible annually). Gutting the kitchen is an improvement (goes into cost base). The difference matters: repairs cut your annual tax but don't help CGT; improvements don't help annual tax but DO shrink your CGT bill.

## The Depreciation Clawback

If you've been running [negative gearing](/blog/gotchas-101-negative-gearing-australia) with depreciation deductions, there's a sting:

- **Division 40 (plant and equipment):** Depreciation claimed gets reversed — the written-down value at sale becomes the cost base for that asset, not what you originally paid
- **Division 43 (capital works):** Depreciation claimed reduces the building's cost base

Those depreciation deductions you enjoyed while you owned the place? Part of them come back as a higher CGT bill when you sell. It's not free money — it's deferred tax.

## Timing Matters

When you sell makes a real difference:

- **The 12-month threshold**: Own it for 12+ months and you get the 50% discount. Sell at 11 months and 29 days? Full gain, full tax.
- **Income stacking**: Big salary year? Had a bonus or sold another asset? Consider whether pushing settlement into the next financial year changes your bracket.
- **Contract date is what counts**: For CGT, the date is usually when you **sign the contract** — not settlement. Same idea as NZ's [bright-line test](/blog/gotchas-101-bright-line-test-nz) end date.

  Selling at 11 months vs 13 months can mean tens of thousands in extra tax. Know your contract date
  and plan around it.

## Australia vs NZ

|                       | Australia                                                                                | New Zealand                                                                                |
| --------------------- | -------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- |
| Capital gains tax     | Formal CGT regime with 50% discount after 12 months                                                            | No CGT — but [bright-line test](/blog/gotchas-101-bright-line-test-nz) taxes gains within 2 years |
| Cost base tracking    | Required — [stamp duty](/blog/gotchas-101-hidden-costs-new-zealand-and-australia), improvements, selling costs | Simpler — only needed if you're within bright-line                                                |
| Depreciation clawback | Yes — Division 40 and 43 adjustments                                                                           | Minimal — limited depreciation claims                                                             |

Full side-by-side in our [New Zealand vs Australia property guide](/blog/gotchas-101-new-zealand-vs-australia).

## Keep the Receipts — From Day One

CGT is calculated when you sell, but the evidence trail starts at purchase. If you can't prove your cost base, the ATO can use a lower figure — and you cop more tax.

What you need:

- **Sale and purchase contracts** — buying and selling
- **Settlement statements** — what you actually paid/received
- **Stamp duty receipts** — a big cost base component (see [hidden costs](/blog/gotchas-101-hidden-costs-new-zealand-and-australia))
- **Reno and improvement invoices** — with proper descriptions of work done
- **Depreciation schedules** — track cumulative claims for the clawback calc
- **Agent commission statement** — deducted from proceeds
- **Legal fee invoices** — purchase and sale conveyancing

You might not sell for 10-20 years. But you need the purchase-era receipts at that point. Losing a $15,000 stamp duty receipt means a $15,000 higher taxable gain. [AI document management](/blog/ai-document-management-property) sorts this by storing everything from day one and pulling out cost base figures automatically — ready whenever you eventually sell.

For the current Australian Taxation Office rental-property watchlist, see [Australia Rental Tax Changes 2026: What the ATO Is Watching](/blog/australia-rental-tax-changes-2026-ato-watchlist). It covers the annual deduction records that later interact with CGT cost-base and depreciation evidence.

## The Short Version

1. The **50% discount** requires 12+ months ownership — and the gain stacks on top of your other income
2. Build your **cost base** properly — stamp duty, legal fees, and capital improvements all count
3. **Depreciation clawback** bumps up your CGT when you sell
4. **Repairs vs improvements** have opposite tax effects — get the classification right
5. **Keep every receipt from purchase day** — you'll need them years or decades later

For a wider view of how the 12-month CGT clock fits alongside the other recurring decisions Australian landlords have to make, see [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia).

_Next up: [Rental Yield — The Number That Lies](/blog/gotchas-101-rental-yield-new-zealand-and-australia)_


Negative gearing lets Australian property investors offset rental losses against income — but the gotchas around cash flow, ATO scrutiny, and real costs catch beginners. A 2026 guide.

ProppiAI Editorial Team, "Negative Gearing in Australia: The Tax Strategy That's Not Free Money", ProppiAI, 2026-03-31.

_Part 4 of the [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series._

  **Negative gearing** is when your rental property costs more to own than it earns (mortgage
  interest, rates, insurance, maintenance, management fees). In Australia, you can offset that loss
  against your other income — your salary included — and pay less tax. Source: [ATO — Rental
  properties](https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties).

## How It Actually Works

Let's crunch a basic example:

| Item                         | Amount       |
| ---------------------------- | ------------ |
| Rental income                | $25,000/year |
| Mortgage interest            | -$22,000     |
| Rates, insurance, management | -$8,000      |
| Depreciation                 | -$5,000      |
| **Net rental loss**          | **-$10,000** |

Earning $90,000 salary? That $10,000 loss drops your taxable income to $80,000. At the 30% marginal rate (2025/26), you save **$3,000 in tax**.

Sounds like a sweet deal — until you clock that the property lost $10,000 in actual cash. You "saved" $3,000 but you're still **$7,000 out of pocket.**

  The number one gotcha: a tax deduction is not a refund. You lose a dollar to save 30–37 cents
  (depending on your tax bracket). Negative gearing only stacks up if the property's capital growth
  beats your after-tax losses over time.

## What You Can and Can't Claim

The ATO has detailed guidance on [rental expenses](https://www.ato.gov.au/individuals-and-families/investments-and-assets/residential-rental-properties/rental-expenses-to-claim). The key categories:

**Claim straight away:**

- Mortgage interest
- Council rates and water
- Insurance (landlord, building, contents)
- Property management fees
- Advertising for tenants
- Pest control, gardening, cleaning
- Tax agent fees (rental portion)

**Claim over time (depreciation):**

- Division 43: Building capital works (2.5%/year for properties built after 1985)
- Division 40: Plant and equipment (carpet, blinds, appliances, hot water systems)

**Can't claim:**

- Purchase costs (stamp duty, legal fees) — these go into your [CGT cost base](/blog/gotchas-101-capital-gains-tax-australia)
- Improvements vs repairs — a brand new kitchen is capital, not maintenance
- Personal use — if you stay at the property yourself, you have to apportion

**Heads up:** The ATO ramped up scrutiny on rental claims in 2024/25. Rental properties are one of their [top focus areas](https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/tax-gap/tax-gap---individuals-not-in-business). Calling an improvement a "repair" and claiming expenses during vacancy without proof you tried to find tenants are classic audit triggers.

For the current federal tax watchlist, see [Australia Rental Tax Changes 2026: What the ATO Is Watching](/blog/australia-rental-tax-changes-2026-ato-watchlist), which focuses on deduction evidence, apportionment, co-ownership, holiday homes, family rentals, and redraw records.

## Negative vs Positive Gearing

|                        | Negatively geared            | Positively geared                  |
| ---------------------- | ---------------------------- | ---------------------------------- |
| Rental income vs costs | Costs exceed income          | Income exceeds costs               |
| Cash flow              | Negative — you're topping up | Positive — property carries itself |
| Tax effect             | Loss reduces taxable income  | Profit adds to taxable income      |
| Best when              | Capital growth is strong     | Yield is the priority              |

Plenty of experienced investors aim for positive gearing — especially in regional areas with higher [rental yields](/blog/gotchas-101-rental-yield-new-zealand-and-australia). Capital-city properties tend to be negatively geared because prices are higher and yields are lower.

## Australia vs NZ — Chalk and Cheese

This is one of the biggest differences between the two markets:

|                             | Australia                   | New Zealand                                                                    |
| --------------------------- | --------------------------- | ------------------------------------------------------------------------------ |
| Mortgage interest deduction | **100%** — fully deductible | **100%** from April 2025 (restored after years of restrictions)                |
| Offset against salary       | **Yes** — full offset       | **No** — [ring-fenced](/blog/gotchas-101-interest-deductibility-nz) since 2019 |
| Depreciation claims         | Generous — Division 40 + 43 | Limited                                                                        |

NZ effectively killed negative gearing through [interest deductibility limits](/blog/gotchas-101-interest-deductibility-nz) and ring-fencing. Australia kept it — and that's one of the key factors in the [New Zealand vs Australia investment comparison](/blog/gotchas-101-new-zealand-vs-australia).

  If you're a Kiwi investor eyeing Australia, negative gearing is the single biggest tax difference.
  But remember: it only works when capital growth delivers over the long haul — you're funding the
  shortfall out of your own pocket in the meantime.

## The Depreciation Trap

Depreciation is a paper deduction — you claim "wear and tear" on the building and fitout without actually spending money. Makes the numbers look great.

**But here's the catch:** When you sell, the depreciation you claimed on plant and equipment gets added back to your [CGT calculation](/blog/gotchas-101-capital-gains-tax-australia) (the "balancing adjustment"). You're not dodging tax permanently — you're deferring it.

New properties have big depreciation deductions in the first 5–10 years. Older places (pre-1985, no recent renos) — barely anything to claim.

## The Document Trail

Negative gearing means keeping proper records. For every rental property:

- **Annual mortgage interest statement** — the biggest deductible expense
- **Rental income records** — agent statements or direct payment records
- **Rates notices** — council and water
- **Insurance certs** — premiums are deductible
- **Repair and maintenance receipts** — and you need to sort repairs (deductible) from improvements (capital)
- **Property management statements** — fees and itemised costs
- **Depreciation schedule** — from a qualified quantity surveyor
- **Purchase records** — for your [CGT cost base](/blog/gotchas-101-capital-gains-tax-australia) when you eventually sell

Across a few properties, that's hundreds of documents a year. The full list of document types is in our [document types guide](/blog/property-document-types-nz), and [AI document management](/blog/ai-document-management-property) can automatically sort expense amounts, flag repair vs improvement invoices, and pull together the records the ATO expects if they come knocking.

For Australia-wide tax record signals and state-specific compliance context, pair this with [Australia Rental Tax Changes 2026: What the ATO Is Watching](/blog/australia-rental-tax-changes-2026-ato-watchlist) and [Australian Landlord Compliance Gap Report 2026](/research/australian-landlord-compliance-gap-2026).

## The Short Version

1. Negative gearing saves you **30–37 cents per dollar lost** — not dollar-for-dollar
2. You fund the **cash flow gap** from your own pocket
3. The ATO is watching — especially repair vs improvement claims
4. Depreciation deductions get partially clawed back through CGT on sale
5. It only works if capital growth eventually exceeds your total after-tax losses
6. Kiwi investors: NZ effectively [binned this strategy](/blog/gotchas-101-interest-deductibility-nz) — it's a genuine reason some look across the ditch

For where negative gearing sits among the other recurring decisions Australian landlords have to make, see our reality-check companion guide [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia).

_Next up: [Capital Gains Tax Australia — The 50% Discount Trap](/blog/gotchas-101-capital-gains-tax-australia)_


New Zealand's interest deductibility rules for rental properties are complicated and keep changing. Learn the 2026 rules for new builds, existing properties, and what documents to track.

ProppiAI Editorial Team, "NZ Interest Deductibility Rules for Landlords: The Gotcha That Keeps Changing", ProppiAI, 2026-03-29.

_Part 3 of the [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series._

  **Interest deductibility** is about how much of your mortgage interest you can claim against
  rental income at tax time. In NZ, the answer depends on **when you bought** and **whether it's a
  new build**. New builds get the full deduction; existing properties are stuck with phased limits
  that have been chopped and changed since 2021.

## Why This Rule Exists (And Why It Won't Stay Still)

Back in March 2021, the government pulled the rug on landlords — mortgage interest deductions on rental properties were gone. The idea was to cool the housing market by making life harder for investors. Basically, they killed [negative gearing](/blog/gotchas-101-negative-gearing-australia) Kiwi-style.

The current government's been winding it back, but differently for new builds vs existing properties. The upshot? One of the most confusing bits of NZ property tax.

## The 2026 Rules

| Property type                                                                                | Deductible in 2025/26 | Notes                    |
| --------------------------------------------------------------------------------------------------- | --------------------- | ------------------------ |
| **New build** (code compliance certificate issued within 20 years of the time interest is incurred) | **100%**              | Always fully deductible  |
| **Existing property** (purchased before 27 March 2021)                                              | **100%**              | Restored from April 2025 |
| **Existing property** (purchased 27 March 2021 – 31 March 2024)                                     | **100%**              | Restored from April 2025 |

From 2025/26 (starting 1 April 2025), mortgage interest on all residential rental properties is fully deductible again. The phase-in is now complete — the 80% cap applied in 2024/25 only.

  Watch out: the phase-in percentages ran off your **income tax year**, not the calendar year. From
  April 2025 (the 2025/26 year), all existing properties are back to 100%. And "new build" has a
  specific legal definition that might not match what you'd reckon it means.

## What Actually Counts as a "New Build"?

This matters because it determines whether you get the full deduction right now:

- The property needs a **code compliance certificate (CCC)** issued on or after 27 March 2020
- The new build status lasts **20 years** from the CCC date
- Converted buildings (like commercial-to-residential) can count if they've got a fresh CCC
- Knocked down and rebuilt? That qualifies too

**The trap:** A "new build" that's 3 years old still counts for interest deductibility — the status sticks for 20 years from the CCC. But you need the actual CCC paperwork to prove it. Lose that document and you're in for a bad time come tax season.

## What This Did to Negative Gearing in NZ

Before 2021, NZ worked a lot like [Australia's system](/blog/gotchas-101-negative-gearing-australia). You could offset rental losses — including interest — against your other income and bring your tax bill down.

The interest limitations changed that. While the cap was in place (80% in 2024/25), your rental loss either shrank or flipped into a "profit" on paper. From April 2025, the deduction is fully restored, but **ring-fencing** still applies:

- Residential rental losses can only offset future rental income — not your salary or business income
- This is fundamentally different from [Australia's negative gearing](/blog/gotchas-101-negative-gearing-australia)
- Cash flow squeeze remains if rent doesn't cover the mortgage

See [the bright-line guide](/blog/gotchas-101-bright-line-test-nz) for how all these rules stack up.

  NZ landlords cop a double hit: even with interest deductibility fully restored from April 2025,
  **ring-fencing** still applies. If your rental genuinely loses money, you can't use that loss to
  cut your salary tax — it just carries forward against future rental profits. That's the key
  difference from [Australia's system](/blog/gotchas-101-negative-gearing-australia).

## Working Out Your Deduction

To figure out how much interest you can claim, you need:

1. **Total interest paid** for the tax year (from your bank's annual mortgage statement)
2. **Purchase date** (determines which phase-in percentage you're on)
3. **New build status** (CCC date, if applicable)
4. **Apportionment** — if you refinanced, drew extra for non-property purposes, or split a loan across properties

Gets properly complicated with multiple properties bought at different times, some new builds, some not. Each property might sit on a different deductibility percentage.

## The Document Stack

- **Annual mortgage interest statements** — the bank sends these; they're your main evidence
- **Loan agreements** — prove you borrowed for the rental property
- **Code compliance certificate** — proves new build status and CCC date
- **Sale and purchase agreement** — confirms purchase date for the phase-in rules
- **Rates and insurance records** — other deductible bits
- **Tenancy agreements and rent records** — prove it was genuinely rented

If you've got a few properties, that's a pile of mortgage statements, purchase agreements, and compliance certs — each with different dates driving different tax percentages. Trying to reconcile all of this by hand for your tax return is painful and easy to stuff up.

[AI document management tools](/blog/ai-document-management-property) can pull interest amounts, CCC dates, and purchase dates out automatically — so you can ask "What's my total deductible interest across all properties for 2025/26?" without wading through every bank statement.

For a broader Inland Revenue file model, see [IRD Rental Records for New Zealand Landlords: What to Keep in 2026](/blog/ird-rental-records-new-zealand-landlords-2026). It covers the 7-year record rule, rental income, expenses, bright-line evidence, short-stay GST watchpoints, and property-level tax folders.

## NZ vs Australia — The Contrast Is Massive

| Rule                        | NZ                                                             | Australia                                                             |
| --------------------------- | -------------------------------------------------------------- | --------------------------------------------------------------------- |
| Mortgage interest deduction | Fully restored from April 2025                                 | [100% fully deductible](/blog/gotchas-101-negative-gearing-australia) |
| Negative gearing            | Effectively gutted by interest rules + ring-fencing            | Fully available — losses offset all income                            |
| Capital gains               | [Bright-line test](/blog/gotchas-101-bright-line-test-nz) only | [Formal CGT regime](/blog/gotchas-101-capital-gains-tax-australia)    |

This is one of the biggest differences covered in our [New Zealand vs Australia property comparison](/blog/gotchas-101-new-zealand-vs-australia).

## The Short Version

1. **New builds** get 100% interest deductibility — existing properties are now also back to 100% from April 2025
2. "New build" status lasts **20 years** from the CCC date — don't lose that certificate
3. **Ring-fencing** means rental losses can't reduce your salary tax
4. You need interest statements, purchase dates, and CCC docs per property
5. The rules have changed three times since 2021 — from April 2025, full deductibility is restored

For where interest deductibility sits among the other recurring decisions NZ landlords have to make, see our reality-check companion guide [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand).

_Next up: [Negative Gearing in Australia — Not Free Money](/blog/gotchas-101-negative-gearing-australia)_


The NZ bright-line test taxes profits on property sold within 2 years. Learn how it works in 2026, exemptions, rollover relief, and what dates to track to avoid surprise tax bills.

ProppiAI Editorial Team, "NZ Bright-Line Test 2026: The Tax Gotcha Every Property Investor Must Know", ProppiAI, 2026-03-27.

_Part 2 of the [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series._

  The **bright-line test** is basically NZ's version of a property gains tax. Sell a residential
  property within the bright-line period — currently **2 years** if you bought on or after 1 July
  2024 — and the profit gets taxed as income. It covers all residential property except your main
  home. Source: [IRD — Bright-line property
  rule](https://www.ird.govt.nz/property/buying-and-selling-residential-property/the-brightline-property-rule).

## The Bright-Line Period Has Changed. A Lot.

The government's fiddled with this thing repeatedly since 2015:

| Purchase date                  | Bright-line period                           |
| ------------------------------ | -------------------------------------------- |
| Before 1 October 2015          | No bright-line (other rules may still apply) |
| 1 October 2015 – 28 March 2018 | 2 years                                      |
| 29 March 2018 – 26 March 2021  | 5 years                                      |
| 27 March 2021 – 30 June 2024   | 10 years                                     |
| **1 July 2024 onwards**        | **2 years**                                  |

The period that applies depends on when you **bought** — not when you sell.

  Here's the trap: heaps of investors who bought between 2021 and June 2024 are still stuck with the
  **10-year** bright-line. The 2-year rule only kicks in for properties purchased from 1 July 2024
  onwards.

## When Does the Clock Start and Stop?

This trips people up all the time. The dates aren't what you'd expect:

- **Start date**: Usually when the title goes into your name — not when you signed the agreement
- **End date**: When you enter into an agreement to sell — not when settlement happens

Your sale and purchase agreement, title docs, and settlement statement have these dates buried in them. Across a portfolio with properties bought in different bright-line eras, keeping track of which date matters for which property is a right headache. [AI document management](/blog/ai-document-management-property) can pull these dates out automatically and track them across all your properties.

For a tighter 2026 checklist focused only on evidence, see [New Zealand Bright-Line Test 2026: The Dates and Documents That Matter](/blog/new-zealand-bright-line-test-2026-dates-documents).

## Main Home Exclusion

You don't pay bright-line tax on your **main home** — the place you actually live. But the IRD's pretty specific about what counts:

- You need to have lived there for **more than 50%** of the time you owned it
- You can only have one main home at a time
- If you rented it out for part of the time, you might get a partial exclusion

**The trap:** Say you live in a place for a year, rent it out for two years, then sell. You could owe bright-line tax on the rental portion. IRD looks at the whole ownership period, not just what you were doing when you sold.

## Rollover Relief

  **Rollover relief** lets you shift residential property between related entities — say, from your
  name into a family trust, or as part of a separation — without triggering bright-line. The new
  owner picks up your original start date. Source: [IRD — Bright-line property
  rule](https://www.ird.govt.nz/property/buying-and-selling-residential-property/the-brightline-property-rule).

Common scenarios where rollover applies:

- Transferring to or from a trust (if you're associated persons)
- Relationship property settlements under the Property (Relationships) Act 1976
- Transfers between companies in the same wholly-owned group

**The trap:** Rollover doesn't restart the clock. If you bought in your own name and transferred to your trust after 18 months, the trust's bright-line period still runs from your original purchase date.

## How Bright-Line Plays With Other NZ Tax Rules

Bright-line doesn't sit on its own. NZ has a few overlapping property tax rules that interact:

1. **Intention test**: Bought a property planning to sell? The profit could be taxable regardless of bright-line. No time limit on this one.
2. **[Interest deductibility](/blog/gotchas-101-interest-deductibility-nz)**: How much mortgage interest you can claim depends on when you bought and whether it's a new build.
3. **Ring-fencing**: Rental losses from residential property can only be offset against future rental income — not your salary.

Aussie investors wondering how this compares to their CGT system can check our [New Zealand vs Australia comparison](/blog/gotchas-101-new-zealand-vs-australia). Australia has a proper [capital gains tax](/blog/gotchas-101-capital-gains-tax-australia) regime instead.

## The Documents You'll Need

To stay on top of bright-line, you need to hang onto:

- **Sale and purchase agreements** (buying and selling) — they've got the critical dates
- **Certificate of title** — confirms when you were registered as owner
- **Settlement statements** — the numbers for your tax calculation
- **Tenancy agreements** — prove rental periods if you're claiming the main home exclusion
- **Reno invoices** — these bump up your cost base and shrink the taxable gain

That's dozens of documents per property, each with dates that affect your tax. Full list in our [NZ property document types guide](/blog/property-document-types-nz).

Once you've got a few properties across different bright-line periods, manually tracking which rules apply to what gets messy fast. This is the kind of thing [ProppiAI's conversational search](/blog/what-is-proppiai) sorts out — ask "Which of my properties are still within their bright-line period?" and get an answer with the source documents right there.

## The Short Version

1. **2-year bright-line** only applies from 1 July 2024 — earlier purchases keep their original period
2. Start date is usually **title registration**, not the date you signed the agreement
3. **Main home exclusion** is proportional — renting it out part-time shrinks the exemption
4. **Rollover relief** doesn't reset the clock — the new owner inherits your dates
5. Bright-line overlaps with the intention test, interest deductibility, and loss ring-fencing

For a wider view of how the bright-line clock fits alongside the other recurring decisions NZ landlords have to make, see [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand).

For the broader compliance context, start with [Rental Rule Changes 2026: What New Zealand and Australia Landlords Need to Track](/blog/rental-rule-changes-2026-new-zealand-australia).

_Next up: [Interest Deductibility for NZ Landlords — The Rules That Keep Changing](/blog/gotchas-101-interest-deductibility-nz)_


An honest guide to property investment strategies in New Zealand and Australia for 2026 — buy and hold, flipping, new builds, and more. Part of our Gotchas 101 series for amateur investors.

ProppiAI Editorial Team, "Property Investment Strategies for Beginners: New Zealand & Australia (2026)", ProppiAI, 2026-03-25.

_Part 1 of the **Property Investment Gotchas 101** series — straight-talking guides for everyday investors in NZ and Australia._

  The four main property investment strategies in 2026 are **buy and hold** (long-term growth +
  rent), **flipping** (buy, reno, sell), **new build** (tax perks and less maintenance), and
  **dual-occupancy / multi-unit** (more rent from one title). Each one comes with different risks,
  time commitments, and tax headaches depending on whether you're buying in NZ or across the ditch.

## The Stuff No One Tells You First

Every "how to get rich with property" guide bangs on about wealth building. Few mention the traps that actually trip up first-timers. That's what this series is for — the real gotchas across NZ and Aussie property.

Three things worth knowing before you do anything:

1. **Your strategy picks your tax bill.** Flipping in NZ? You'll cop the [bright-line test](/blog/gotchas-101-bright-line-test-nz). Banking on negative gearing in Australia? It's [not the free ride you think](/blog/gotchas-101-negative-gearing-australia).
2. **It costs way more than the asking price.** Stamp duty (AU), legal fees, inspections, insurance — the real cost is 5–8% on top. Have a look at our [hidden costs breakdown](/blog/gotchas-101-hidden-costs-new-zealand-and-australia).
3. **Yield numbers are dodgy.** That "7% yield" on the listing is gross. Net yield — once you subtract rates, insurance, management, and vacancy — usually lands at 2–4%. We dig into this in [rental yield gotchas](/blog/gotchas-101-rental-yield-new-zealand-and-australia).

## Strategy 1: Buy and Hold

The bread and butter. Buy a place, rent it out, sit tight, and let capital growth do the heavy lifting while rent covers (some of) the mortgage.

**In NZ:**

- No capital gains tax if you hold past the [bright-line period](/blog/gotchas-101-bright-line-test-nz) — currently 2 years from July 2024
- Mortgage interest is fully deductible on new builds; existing properties have [messy phase-in rules](/blog/gotchas-101-interest-deductibility-nz)
- No stamp duty. One thing NZ actually gets right

**In Australia:**

- [Capital gains tax](/blog/gotchas-101-capital-gains-tax-australia) hits on sale, but hold for 12+ months and you get a 50% discount
- [Negative gearing](/blog/gotchas-101-negative-gearing-australia) lets you offset rental losses against your salary
- [Stamp duty](/blog/gotchas-101-hidden-costs-new-zealand-and-australia) at purchase — and it varies wildly by state

  Buy and hold is the safest bet for beginners, but returns depend on location, how long you hold,
  and which side of the Tasman you're on. NZ rewards patience through bright-line exemption;
  Australia rewards it through the 50% CGT discount.

## Strategy 2: Flipping (Reno and Sell)

Buy something under market value, do it up, sell for a profit. Sounds simple on telly.

**NZ gotcha:** Sell within 2 years and the profit gets taxed as income under the [bright-line test](/blog/gotchas-101-bright-line-test-nz). And even outside bright-line, the IRD can still come after you under the "intention to sell" rule if they reckon you bought it planning to flip.

**AU gotcha:** Sell within 12 months and you pay [CGT on the full gain](/blog/gotchas-101-capital-gains-tax-australia) — no 50% discount. You also need to document every reno cost properly. They're part of your "cost base" and reduce your taxable gain, but only if you've got the receipts.

  Flipping looks great on reality TV, but the tax treatment on both sides of the ditch makes
  short-term gains way less profitable than you'd expect. Once you add up reno costs, holding costs,
  agent fees, and tax, that "profit" can shrink pretty fast.

## Strategy 3: New Build

Buying a new house-and-land package, an apartment off the plan, or building from scratch.

**NZ perk:** Full mortgage interest deductibility for new builds — unlike existing properties where [interest deduction is capped](/blog/gotchas-101-interest-deductibility-nz).

**AU perk:** Bigger depreciation deductions on the building and fitout. New properties qualify for full Division 40 (plant and equipment) and Division 43 (capital works) claims, which knocks a decent chunk off your taxable income in the early years.

**The gotcha:** Off-the-plan purchases carry settlement risk. By the time you settle, the bank might value it lower than what you paid — and suddenly you've got a funding gap. In Australia, you also pay [stamp duty on the full contract price](/blog/gotchas-101-hidden-costs-new-zealand-and-australia) in most states.

## Strategy 4: Dual-Occupancy and Multi-Unit

Turning one dwelling into two (or buying a dual-key setup) to squeeze more rent out of a single title.

**NZ:** Popular in Auckland and Welly where demand outstrips supply. Just check the council district plan first — not all zones let you add a second dwelling.

**AU:** Growing fast in metro fringe suburbs. Some councils fast-track consent for secondary dwellings. Rules change by state — in NSW, complying development rules let you build a granny flat up to 60m² without a full DA in certain zones.

  Dual-occupancy can deliver better yields than a single tenancy, but council approvals, extra build
  costs, and separate compliance for each dwelling add layers of complexity that catch people out.

## The Paperwork Pile-Up

Whatever strategy you go with, the paperwork multiplies fast. One investment property generates sale and purchase agreements, loan docs, insurance policies, inspection reports, rates notices, tenancy agreements, and compliance certs — easily [20+ documents in the first year](/blog/property-document-types-nz).

Once you've got a couple of properties, keeping track of lease renewals, insurance expiry dates, and compliance deadlines across the lot is genuinely painful. [AI-powered document management](/blog/ai-document-management-property) takes the sting out — it classifies everything, pulls out the key data, and lets you search across your whole portfolio in seconds instead of rummaging through folders.

## The Rest of This Series

This is Part 1 of the **Gotchas 101** series. Each post tackles a specific trap that catches investors:

- [NZ Bright-Line Test: The Tax Gotcha](/blog/gotchas-101-bright-line-test-nz)
- [NZ Interest Deductibility: The Rules That Keep Changing](/blog/gotchas-101-interest-deductibility-nz)
- [Negative Gearing Australia: Not Free Money](/blog/gotchas-101-negative-gearing-australia)
- [Capital Gains Tax Australia: The 50% Discount Trap](/blog/gotchas-101-capital-gains-tax-australia)
- [Rental Yield: The Number That Lies](/blog/gotchas-101-rental-yield-new-zealand-and-australia)
- [Hidden Costs of Buying an Investment Property](/blog/gotchas-101-hidden-costs-new-zealand-and-australia)
- [First Home Buyer Schemes Australia 2026](/blog/gotchas-101-first-home-buyer-australia)
- [SMSF Property: Buying With Your Super](/blog/gotchas-101-smsf-property-australia)
- [New Zealand vs Australia: Comparing Two Property Markets](/blog/gotchas-101-new-zealand-vs-australia)

## Reality-Check Companion Guides

Once you've worked through the strategy and the specific gotchas, the question becomes: what does an amateur investor actually need from a tool, day to day? Our two reality-check pillars cover that, region by region:

- [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand) — the six forward-looking decisions that move money for NZ landlords
- [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia) — the same six, with state-by-state evidence for AU


ProppiAI turns scattered property documents into searchable intelligence. Upload your leases, insurance certs, and compliance docs — then ask questions in plain English.

ProppiAI Editorial Team, "What is ProppiAI? Property Document Intelligence for NZ Landlords", ProppiAI, 2026-03-20.

**ProppiAI** is a document intelligence platform for NZ landlords and property managers. You
  upload your property documents — leases, insurance policies, inspection reports, compliance certs,
  the lot — and the AI organises them, pulls out the important stuff (dates, amounts, parties), and
  lets you search across everything in plain English.

## The Paperwork Problem (You Know This One)

If you've got even one rental property, you already know the drill. The tenancy agreement's in your email. The insurance certificate's on Google Drive. The Healthy Homes assessment is… somewhere. Council rates notice? Probably still in the letterbox.

Now imagine you've got five properties. Or ten. Every property comes with its own [stack of documents](/blog/property-document-types-nz) — and they all live in different places.

When tax time rolls around, or a tenant asks about their bond, or you need to prove [Healthy Homes compliance](/blog/nz-healthy-homes-compliance-guide), you're hunting through inboxes, folders, and actual physical piles of paper. It's not fun, and it's not a good use of your time.

That's the problem ProppiAI exists to fix.

## How It Works (the Short Version)

### 1. Upload Whatever You've Got

PDFs, scanned documents, photos of paper — doesn't matter. The AI reads everything through [OCR (Optical Character Recognition)](/blog/ai-document-management-property), including dodgy scans and handwritten notes. You don't need to sort or label anything.

### 2. AI Does the Filing

Every document gets automatically classified — tenancy agreement, insurance policy, rates notice, building report, [compliance certificate](/blog/nz-healthy-homes-compliance-guide), whatever it is. Then the AI extracts the key details: dates, dollar amounts, names, addresses, clauses. No manual data entry.

### 3. Ask Questions, Get Answers

This is the bit that changes how you work. Instead of opening folders and scanning PDFs, you just ask:

- _"When does the lease at 42 Queen Street expire?"_
- _"Which properties have insurance expiring this quarter?"_
- _"What's the rent on my Ponsonby flat?"_
- _"Show me the special conditions in the Smith tenancy."_

ProppiAI searches across your entire portfolio and shows you the answer — with a link to the original document so you can verify it yourself.

### 4. Deadline Tracking

The AI picks up every important date — lease renewals, insurance expiries, [Healthy Homes deadlines](/blog/nz-healthy-homes-compliance-guide), inspection dates — and keeps track of them for you. No more spreadsheets, no more calendar reminders you set up once and then forget to update.

  The three things that eat your time as a landlord are **sorting documents**, **finding information
  in them**, and **tracking deadlines**. ProppiAI automates all three. Upload your docs, ask
  questions when you need answers, and let the AI keep track of what's due.

## Who Actually Uses This?

- **Landlords with a few rentals** — you don't need ten properties to drown in paperwork. Even two or three creates enough admin to make you wonder where the weekend went.
- **Portfolio owners (5–50+ properties)** — this is where manual tracking properly falls over. You can't keep it all in your head, and spreadsheets only work until they don't.
- **Property managers** — handling documents across multiple owners, multiple properties. The search-across-everything feature is the game changer here.
- **Body corporate committees** — meeting minutes, maintenance plans, insurance certs, consent docs. It piles up.

## What Does It Cost?

Free tier: up to 3 properties and 50 documents. Enough to give it a proper test run without paying a cent.

Paid plans start at $19/month (Essential — 10 properties, 500 documents) and go up to Team plans for property management companies.

## Honestly, How's It Different From a Google Drive Folder?

| What you need to do           | Google Drive / email                | ProppiAI                          |
| ----------------------------- | ----------------------------------- | --------------------------------- |
| Organise documents            | You sort them manually              | AI classifies automatically       |
| Find a specific piece of info | Open folders, scan through PDFs     | Ask a question in plain English   |
| Track deadlines               | Separate spreadsheet or calendar    | Pulled from documents, tracked    |
| See compliance status         | Check each property individually    | Portfolio-wide dashboard          |
| Process a new document        | Read it, file it, update your notes | Upload it — everything else is AI |

The difference isn't just speed — it's that your documents become a searchable knowledge base instead of a filing system.

## Want the Technical Deep Dive?

If you're curious about how the AI processing actually works — OCR, classification, entity extraction, embeddings — we've written a [technical explainer on AI document management for property](/blog/ai-document-management-property).

## Keep Reading

- [Property Document Types in NZ: Complete Reference](/blog/property-document-types-nz) — every document type you'll encounter as a landlord
- [NZ Healthy Homes Standards: Compliance Guide](/blog/nz-healthy-homes-compliance-guide) — the rules, the deadlines, and the penalties
- [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) — tax traps, hidden costs, and rules that catch NZ and AU investors off guard

ProppiAI is free to try with up to 3 properties. Upload your first document and see AI-powered property intelligence in action — no credit card required.


OCR, classification, entity extraction, embeddings, conversational search — here's what actually happens when AI processes your property documents, and why it matters for NZ landlords.

ProppiAI Editorial Team, "How AI Document Management Works for Property (The Technical Bit)", ProppiAI, 2026-03-18.

**AI document management for property** uses four technologies in sequence: **OCR** (reading
  documents), **classification** (sorting them), **entity extraction** (pulling out dates, amounts,
  and names), and **conversational search** (letting you ask questions in plain English). Together,
  they turn a pile of scattered PDFs into a searchable knowledge base — no manual filing required.

## Why Property Documents Specifically?

Property documents are a surprisingly good fit for AI. Here's why: they're highly structured (leases follow patterns, insurance policies have standard sections, rates notices look similar every year), but they arrive in messy formats (email attachments, scanned PDFs, photos of paper, stuff your property manager forwards).

That combination — structured content in unstructured formats — is exactly what modern AI document processing was built to handle.

A typical NZ landlord with a few properties accumulates [dozens of document types](/blog/property-document-types-nz) — tenancy agreements, bond lodgement forms, inspection reports, insurance certificates, rates notices, [Healthy Homes assessments](/blog/nz-healthy-homes-compliance-guide), and more. Across a portfolio, the volume gets real.

Traditional approaches — Google Drive folders, spreadsheets tracking key dates, that one folder on your desktop called "Property Stuff 2024" — work fine until they don't. They rely on you doing the sorting, you doing the searching, and your memory to track what's due when.

AI changes the equation. Here's how each step works.

## Step 1: OCR — Reading the Document

When you upload a property document — PDF, scanned image, photo from your phone — the first thing that happens is OCR (Optical Character Recognition).

  **OCR** converts images and scans into machine-readable text. But modern AI-powered OCR does more
  than recognise characters — it understands document **layout**. It knows that the thing at the top
  is a header, the grid in the middle is a table, and the scribble in the margin is a handwritten
  note. That structural awareness is what makes everything downstream work.

What good OCR handles:

- **Layout analysis** — headers, paragraphs, tables, signatures, page numbers
- **Handwriting** — annotations, margin notes, signed sections
- **Multi-page documents** — maintaining structure across pages (a 30-page lease isn't treated as 30 separate documents)
- **Dodgy quality** — faded faxes, phone photos at weird angles, that scan your property manager made on a printer from 2009

The output isn't just a flat wall of text. It's structured: the OCR knows which text belongs to which section, which numbers are in which table column, and what the reading order is. That structure is critical for the next step.

## Step 2: Classification — What Kind of Document Is This?

Once the AI can read the document, it classifies it. Is this a tenancy agreement? An insurance policy? A rates notice? A building inspection report?

For NZ property documents, the categories look something like this:

| Category          | Typical document types                                                            | Why classification matters                                                    |
| ----------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- |
| Tenancy           | Fixed-term leases, periodic agreements, variation notices                         | Drives deadline tracking (expiry, renewal)                                    |
| Title & ownership | Certificates of title, sale & purchase agreements, settlement statements          | Legal records with settlement dates                                           |
| Insurance         | Landlord insurance, building insurance certs                                      | Expiry dates, coverage verification                                           |
| Compliance        | [Healthy Homes assessments](/blog/nz-healthy-homes-compliance-guide), BWOFs, CCCs | Regulatory deadlines, [penalty risk](/blog/nz-healthy-homes-compliance-guide) |
| Financial         | Rates notices, mortgage documents, rental income statements                       | Payment dates, tax records                                                    |
| Correspondence    | Council letters, tenant comms, body corporate minutes                             | Response deadlines, legal trail                                               |

For the full breakdown, check our [NZ property document types reference](/blog/property-document-types-nz).

The key insight: classification isn't just labelling. It tells the system what to look for next. A tenancy agreement needs lease dates and rent amounts. An insurance policy needs expiry dates and coverage types. A rates notice needs payment due dates. Classification determines which extraction rules apply.

## Step 3: Entity Extraction — Pulling Out What Matters

This is where the real value kicks in. After the AI knows what kind of document it's looking at, it extracts the specific pieces of information that actually matter:

- **Dates** — lease start/end, insurance expiry, next inspection due, [Healthy Homes compliance deadline](/blog/nz-healthy-homes-compliance-guide)
- **Amounts** — weekly rent, bond ($), premium, rates payable
- **Parties** — tenant names, landlord details, agent contacts, insurer
- **Properties** — street addresses, legal descriptions
- **Clauses** — break clauses, renewal options, special conditions, exclusions

  **Entity extraction** is the process of identifying and pulling structured data — dates, dollar
  amounts, names, addresses, clauses — out of unstructured documents. Once extracted, these become
  searchable metadata. That's what lets you ask "which leases expire in the next 3 months?" without
  opening a single PDF.

The extraction is context-aware. The AI knows that "$550" in a tenancy agreement is probably a weekly rent, while "$550" in an insurance document is probably an excess. Same characters, different meaning — and the classification step gives the AI the context to get it right.

## Step 4: Embeddings & Search — Asking Questions

The final layer is what makes all of this usable day-to-day. Instead of navigating folders or remembering file names, you ask questions in plain English:

- _"What's the rent on my Grey Lynn flat?"_
- _"When was the last building inspection for 15 Oak Avenue?"_
- _"Show me all insurance policies expiring before June."_
- _"What are the special conditions in the Smith tenancy?"_

Under the hood, this uses **vector embeddings** — a technique where both your question and your documents are converted into numerical representations that capture meaning, not just keywords. "When does the lease expire?" and "tenancy end date" mean the same thing, and the embedding model knows it.

The AI searches across your entire document corpus, finds the relevant passages, and presents the answer — with a reference back to the source document so you can verify it yourself. No blind trust required.

  The four-step pipeline — OCR → classification → extraction → search — turns property documents
  from static files into a live, queryable knowledge base. Every document you add makes the system
  smarter and more complete. The tech is genuinely clever, but the outcome is simple: you ask a
  question and get an answer in seconds instead of digging through folders.

## Why This Matters More Than You'd Think

The obvious benefit is speed — finding stuff faster. But the bigger win is what happens when your documents become searchable as a _whole_:

**Compliance visibility.** "Which of my properties have current [Healthy Homes assessments](/blog/nz-healthy-homes-compliance-guide)?" isn't a question you can answer quickly with a filing system. With extracted entities and classification, it's a 5-second query.

**Tax time.** Your accountant asks for last year's interest statements, repair invoices, insurance premiums, and rates notices across all properties. That's an afternoon with folders. It's a few queries with AI document management.

**Deadline safety.** The AI doesn't just extract dates — it tracks them. Lease renewals, insurance expiries, compliance deadlines. No spreadsheet to maintain. No calendar reminders to set up and hope you don't accidentally delete.

**[Cost awareness](/blog/gotchas-101-hidden-costs-new-zealand-and-australia).** When you can search across all your financial documents at once, you start seeing patterns — which properties cost the most to maintain, where your insurance premiums are climbing, whether your [yield calculations](/blog/gotchas-101-rental-yield-new-zealand-and-australia) still stack up.

## The Limitations (Being Honest)

AI document management isn't magic. A few things to keep in mind:

- **Garbage in, garbage out.** If the scan is completely unreadable, OCR can't save it. Phone photos work, but a blurry snap of a crumpled document taken in bad lighting will give poor results.
- **Edge cases.** Unusual document formats, non-standard templates, or very short documents (a one-line email forwarding an attachment) can sometimes trip up classification.
- **Not legal advice.** The AI can tell you what a document says. It can't tell you what it means in a legal context. For that, you still need your solicitor.
- **Only as complete as what you upload.** If you haven't uploaded your insurance policy, the AI can't tell you when it expires. Sounds obvious, but the system only knows what it's been given.

## Getting Started

The barrier to entry is genuinely low. Upload your existing documents — even the messy scanned ones — and the AI handles classification, extraction, and indexing automatically. No tagging taxonomy to design, no training period.

Start with the critical stuff: current tenancy agreements, insurance certificates, and anything with an upcoming deadline. You'll see the value immediately.

If you want to try this with your own portfolio, [ProppiAI](/blog/what-is-proppiai) has a free tier for up to 3 properties.

## Keep Reading

- [Property Document Types in NZ: Complete Reference](/blog/property-document-types-nz) — every document type you'll encounter and what's in them
- [NZ Healthy Homes Standards: Compliance Guide](/blog/nz-healthy-homes-compliance-guide) — the compliance documents you'll definitely need to track
- [Hidden Costs of Property Investment](/blog/gotchas-101-hidden-costs-new-zealand-and-australia) — where all those documents (and costs) come from
- [Rental Rule Changes 2026: What New Zealand and Australia Landlords Need to Track](/blog/rental-rule-changes-2026-new-zealand-australia) — the current rule-change series built around document evidence

## Further Reading

If you're investing in property across NZ or Australia, our [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series covers the tax rules, hidden costs, and compliance traps that generate all those documents in the first place — from the [bright-line test](/blog/gotchas-101-bright-line-test-nz) and [Healthy Homes compliance](/blog/nz-healthy-homes-compliance-guide) to [stamp duty and hidden costs across the Tasman](/blog/gotchas-101-hidden-costs-new-zealand-and-australia).

For a timely compliance cluster, the [Rental Rule Changes Watch 2026](/blog/rental-rule-changes-2026-new-zealand-australia) series shows how tenancy changes, pet bonds, Inland Revenue records, bright-line dates, and Australian Taxation Office deduction guidance all become source-document questions.


Complete guide to New Zealand's Healthy Homes Standards for landlords. Covers heating, insulation, ventilation, moisture, and draught stopping requirements, deadlines, and penalties.

New Zealand
Australia
New South Wales
Victoria
Queensland

ProppiAI Editorial Team, "NZ Healthy Homes Standards: A Landlord's Compliance Guide (2026)", ProppiAI, 2026-03-15.

**The Healthy Homes Standards** are a set of legally enforceable minimum requirements for New
  Zealand rental properties, introduced under the [Residential Tenancies (Healthy Homes Standards)
  Regulations 2019](https://www.legislation.govt.nz/regulation/public/2019/0088/latest/whole.html).
  They set specific standards for **heating**, **insulation**, **ventilation**, **moisture ingress
  and drainage**, and **draught stopping** that all private landlords must meet.

## What Are the Healthy Homes Standards?

The standards apply to all private residential tenancies, boarding house tenancies, and some social housing tenancies. They are legally enforceable — landlords who fail to comply face penalties and potential [Tenancy Tribunal](https://www.tenancytribunal.govt.nz/) orders.

According to [Tenancy Services NZ](https://www.tenancy.govt.nz/healthy-homes/), landlords must include a Healthy Homes compliance statement with every new or renewed tenancy agreement, confirming whether the property meets each of the five standards.

_Last reviewed: March 2026. This guide reflects regulations current as of the date of publication. Always confirm with [Tenancy Services](https://www.tenancy.govt.nz/healthy-homes/) for the latest requirements._

## The Five Standards at a Glance

| Standard         | Core Requirement                          | Key Metric                       |
| ---------------- | ----------------------------------------- | -------------------------------- |
| Heating          | Fixed heater in main living room          | Must heat to at least **18°C**   |
| Insulation       | Ceiling and underfloor insulation         | Minimum R-values by climate zone |
| Ventilation      | Openable windows + extractor fans         | **5% of floor area** for windows |
| Moisture         | Adequate drainage + ground vapour barrier | No unreasonable moisture ingress |
| Draught stopping | Seal unnecessary gaps and holes           | Windows/doors close properly     |

## The Five Standards Explained

### 1. Heating Standard

  Every New Zealand rental property must have a fixed heater in the main living room capable of
  heating the room to at least **18°C**. Qualifying heater types include heat pumps, wood burners or
  pellet burners (meeting NES requirements), and flued gas heaters. Portable electric heaters,
  unflued gas heaters, and open fires do **not** meet the standard.

Electric panel heaters only qualify if the living room is small enough — under 12m². For most properties, a heat pump is the most cost-effective compliant option.

### 2. Insulation Standard

Ceiling and underfloor insulation must meet minimum R-values or be in reasonable condition if it was installed when building consent was issued. The requirements vary by climate zone:

| Climate Zone | Regions                            | Ceiling R-value | Underfloor R-value |
| ------------ | ---------------------------------- | --------------- | ------------------ |
| Zone 1       | Auckland, Northland                | R 2.9           | R 1.3              |
| Zone 2       | Waikato, Bay of Plenty, Wellington | R 2.9           | R 1.3              |
| Zone 3       | Canterbury, Otago, Southland       | R 3.3           | R 1.3              |

Source: [MBIE — Insulation requirements for rental properties](https://www.building.govt.nz/getting-started/guides-for-homeowners/insulating-your-home/)

Existing insulation that was compliant when installed can remain if it's in reasonable condition — meaning it's dry, not significantly compressed, and covers the required area.

### 3. Ventilation Standard

  Under the Healthy Homes ventilation standard, all habitable rooms must have openable windows or
  doors with an area of at least **5% of the floor area**. All kitchens and bathrooms must have an
  extractor fan ducted to the outside. Fans must be in good working order.

### 4. Moisture Ingress and Drainage Standard

The property must have:

- **Adequate drainage** for the removal of stormwater, surface water, and ground water
- **A ground vapour barrier** if the property has an enclosed subfloor space
- **No unreasonable moisture ingress** — gutters, downpipes, and drains must be in good repair

### 5. Draught Stopping Standard

All unnecessary gaps and holes in walls, ceilings, windows, floors, and doors that cause noticeable draughts must be stopped. This includes:

- **Windows and doors** must close properly and have no visible gaps
- **Unused chimneys and fireplaces** must be blocked
- **Holes around pipes and fittings** must be sealed

## Compliance Deadlines

  For **new or renewed tenancies** (signed or renewed after 1 July 2021), landlords must comply
  within **90 days** of the tenancy start date. For **existing tenancies**, all private landlords
  were required to comply by **1 July 2025**. Landlords who have not yet brought their properties
  into compliance are already past the deadline and should act immediately.

Source: [Tenancy Services — Healthy Homes Standards deadlines](https://www.tenancy.govt.nz/healthy-homes/about-the-healthy-homes-standards/)

## Penalties for Non-Compliance

  The Tenancy Tribunal can order landlords to carry out remediation work and can award **exemplary
  damages of up to $7,200 for each breach** of the Healthy Homes Standards. Tenants can also apply
  for rent reduction while standards are not met. Repeated or intentional non-compliance can result
  in higher penalties.

Source: [Residential Tenancies Act 1986, Section 45](https://www.legislation.govt.nz/act/public/1986/0120/latest/DLM94278.html)

## How to Stay Compliant

### 1. Get a Healthy Homes Assessment

Hire a qualified assessor to inspect each rental property against all five standards. The assessment will identify gaps and recommend specific remediation work.

### 2. Track Compliance Documents

For each property, maintain records of:

- The Healthy Homes compliance statement (provided with every new tenancy agreement)
- Assessment reports from qualified assessors
- Receipts and certificates for remediation work (heat pump installation, insulation, extractor fans)
- Photographs documenting compliance

For a complete list of compliance-related document types, see our [NZ property document types guide](/blog/property-document-types-nz).

### 3. Monitor Ongoing Compliance

Compliance isn't a one-time event. You need to ensure:

- Heating systems remain operational
- Insulation stays in reasonable condition
- Ventilation fans continue working
- Drainage remains effective
- Draught stopping measures remain intact

Regular inspections (at least annually) should include checks against the Healthy Homes Standards.

### 4. Use Document Management Tools

Managing compliance documents across multiple properties is where most landlords struggle. [AI-powered document management](/blog/ai-document-management-property) can:

- Upload assessment reports and compliance certificates
- Automatically track compliance dates and deadlines
- Search across all properties for compliance status
- Get alerts when re-assessment is due

[ProppiAI](/blog/what-is-proppiai) automates this process — upload your Healthy Homes assessments and compliance certificates, and the AI extracts deadlines, tracks status across your portfolio, and alerts you when action is needed.

## Key Resources

- **[Tenancy Services NZ — Healthy Homes Standards](https://www.tenancy.govt.nz/healthy-homes/)** — official government guidance, compliance tools, and assessment templates
- **[MBIE — Building Performance](https://www.building.govt.nz/)** — insulation requirements, building code guidance, and compliance information
- **[Residential Tenancies Act 1986](https://www.legislation.govt.nz/act/public/1986/0120/latest/DLM94278.html)** — full text of the legislation
- **[Tenancy Tribunal](https://www.tenancytribunal.govt.nz/)** — dispute resolution and enforcement
- **Your local council** — building consent requirements for remediation work

## Summary

  The Healthy Homes Standards require NZ landlords to meet specific requirements across five areas:
  heating (18°C minimum), insulation (R-values by climate zone), ventilation (5% floor area +
  extractor fans), moisture control (drainage + vapour barriers), and draught stopping. All private
  landlords must already be compliant. Non-compliance carries penalties of up to $7,200 per breach.

For landlords managing multiple properties, organised [document management](/blog/ai-document-management-property) is essential to staying on top of compliance across your portfolio. Healthy Homes is also one of the six recurring decisions we cover in our New Zealand reality-check guide, [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand).

## Thinking About Investing in Australia Too?

Australia has no national equivalent of the Healthy Homes Standards — instead, minimum standards are set state by state, with diverging rules in Victoria, Queensland, New South Wales, and the rest. Our [New Zealand vs Australia property investment comparison](/blog/gotchas-101-new-zealand-vs-australia) covers [hidden costs](/blog/gotchas-101-hidden-costs-new-zealand-and-australia), tax differences, and why Healthy Homes is one of the things that makes NZ investing genuinely different. For the Australian-side equivalent of this reality-check guide, see [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia).


Tenancy agreements, bonds, titles, insurance, Healthy Homes, rates, LIMs — every document type NZ landlords encounter, what's in it, and why it matters.

ProppiAI Editorial Team, "Every Property Document NZ Landlords Deal With (Complete Reference)", ProppiAI, 2026-03-12.

NZ landlords deal with over **20 distinct document types** across tenancy, ownership, insurance,
  compliance, and financial categories. The ones that really matter — because they carry deadlines
  and legal risk — are tenancy agreements, bonds, [Healthy Homes
  assessments](/blog/nz-healthy-homes-compliance-guide), insurance policies, and rates notices.

## The Big Picture

Managing [dozens of documents per property per year](/blog/ai-document-management-property) is one of the less glamorous parts of being a landlord. This guide is a reference — bookmark it and come back when you need to know what a document is, what's in it, or why you should care about it.

## Quick Reference

| Category          | Key documents                                                                              | Critical dates                                 |
| ----------------- | ------------------------------------------------------------------------------------------ | ---------------------------------------------- |
| Tenancy           | Tenancy agreement, bond lodgement, inspection reports                                      | Lease expiry, renewal, bond lodgement deadline |
| Title & ownership | Certificate of title, sale & purchase agreement, settlement statement                      | Settlement date                                |
| Insurance         | Landlord insurance, building insurance certificate                                         | Policy expiry, renewal date                    |
| Compliance        | [Healthy Homes assessment](/blog/nz-healthy-homes-compliance-guide), BWOF, CCC, LIM report | Compliance deadline, re-assessment due         |
| Financial         | Rates notice, mortgage documents, rental income statements                                 | Payment due dates                              |
| Correspondence    | Council letters, body corporate minutes, tenant communications                             | Response deadlines                             |

## Tenancy Documents

### Tenancy Agreement

  A **tenancy agreement** (most people just call it a lease) is the legal contract between you and
  your tenant. Under the [Residential Tenancies Act
  1986](https://www.legislation.govt.nz/act/public/1986/0120/latest/DLM94278.html), every
  residential tenancy must have a written agreement. It's either **fixed-term** (set end date) or
  **periodic** (rolls on until someone gives notice).

**What's in it:**

- Tenant and landlord names and contact details
- Property address and description
- Tenancy type (fixed-term or periodic)
- Start date and end date (if fixed-term)
- Weekly rent and payment method
- Bond amount (max 4 weeks' rent under the [RTA](https://www.legislation.govt.nz/act/public/1986/0120/latest/DLM94278.html))
- Special conditions (pets, smoking, gardens, whatever you've agreed on)

**Why you should care:** This is the foundation of your legal relationship with the tenant. The dates in it drive everything — when rent's due, when the lease is up, when you can review the rent. Get this right and keep it somewhere you can actually find it.

### Bond Lodgement Form

  When you collect bond from a tenant, you **must** lodge it with [Tenancy
  Services](https://www.tenancy.govt.nz/rent-bond-and-bills/bond/) within **23 working days**.
  That's the law. Miss the deadline and you're looking at a potential [$7,200
  penalty](/blog/nz-healthy-homes-compliance-guide) — one of those rules that catches first-time
  landlords by surprise.

**What's in it:** Bond amount, tenant details, property address, lodgement date, Tenancy Services reference number.

### Property Inspection Report

You'll do these every 3–6 months (or your property manager will). They record the condition of the property, flag maintenance issues, and check that everything's still in order.

**What's in it:** Inspection date, condition notes by room, photos, maintenance issues spotted, any concerns about how the tenant's looking after the place.

**Pro tip:** Photos are everything. If you ever end up at the Tenancy Tribunal making a bond claim, these reports (with timestamps and photos) are your evidence.

## Title and Ownership Documents

### Certificate of Title

  The **Certificate of Title** is the official record of who owns the property, maintained
  electronically by [Land Information New Zealand (LINZ)](https://www.linz.govt.nz/). It shows the
  owner(s), whether it's freehold, leasehold, or unit title, and any registered interests like
  mortgages, caveats, and easements.

**What's in it:** Legal description, registered owner(s), estate type, registered interests (mortgages, caveats, easements), survey references.

You probably got this at purchase and haven't looked at it since. Keep it filed — you'll need it if you refinance, sell, or need to prove ownership for any reason.

### Sale and Purchase Agreement

The record of the property transaction itself.

**What's in it:** Purchase price, settlement date, conditions (finance, building inspection, LIM), chattels included, special conditions, vendor and purchaser details.

**Tax tip:** This is part of your cost base for [bright-line purposes](/blog/gotchas-101-bright-line-test-nz). Keep it forever.

For the 2026 evidence workflow, see [New Zealand Bright-Line Test 2026: The Dates and Documents That Matter](/blog/new-zealand-bright-line-test-2026-dates-documents), which breaks down the start date, end date, IR833, rollover relief, and sale-file records.

### Settlement Statement

Your solicitor prepares this at settlement — it's the financial summary of everything that happened on the day.

**What's in it:** Purchase price, deposit paid, mortgage details, rates adjustments, legal fees, settlement date.

## Insurance Documents

### Landlord Insurance Policy

  **Landlord insurance** is a specialist policy covering rental property risks — tenant damage, loss
  of rent, and public liability. It's not legally required, but going without it is genuinely risky.
  Standard homeowner policies don't cover rental-specific risks, so you need the actual landlord
  version.

**What's in it:** Policy number, insured address, coverage types (building, contents if furnished, loss of rent, liability), excess amounts, premium, policy period, and the exclusions (read these — meth contamination and gradual damage are commonly excluded).

**What to watch:** Expiry dates. If your insurance lapses and something happens, you're uninsured. It's one of those documents where the date really matters.

### Building Insurance Certificate

For unit title / body corporate properties, this confirms the building-level insurance is in place. You get a certificate rather than managing the policy yourself.

**What's in it:** Sum insured, insurer, policy period, building address.

## Compliance Documents

### Healthy Homes Assessment

Required under the [Healthy Homes Standards](/blog/nz-healthy-homes-compliance-guide) — this documents whether your rental meets the five standards for heating, insulation, ventilation, moisture, and draught stopping.

**What's in it:** Compliance status for each standard, specific measurements (R-values, heater capacity, ventilation area), what needs fixing, assessor details.

  Healthy Homes compliance is mandatory for all NZ rental properties. The penalty for non-compliance
  is [up to $7,200 per breach](/blog/nz-healthy-homes-compliance-guide). Keep assessment reports,
  remediation receipts, and compliance statements for every property — they're your proof.

### Building Warrant of Fitness (BWOF)

  A **BWOF** is an annual certificate confirming that a building's safety systems — fire alarms,
  sprinklers, emergency lighting, lifts, ventilation — are maintained and working. It's required for
  commercial buildings and larger residential buildings under the [Building Act
  2004](https://www.legislation.govt.nz/act/public/2004/0072/latest/DLM306036.html). If your rental
  is in a standalone house, you probably don't need one.

**What's in it:** Building address, compliance schedule, inspection results for each system, issue date, IQP (independent qualified person) details.

### Code Compliance Certificate (CCC)

The council issues this when building work is completed to the standard set out in the building consent. If you've done any renovations, extensions, or [Healthy Homes remediation work](/blog/nz-healthy-homes-compliance-guide) that required consent, you'll get one of these.

**What's in it:** Building consent number, description of work, property address, date of issue, council reference.

### LIM Report (Land Information Memorandum)

  A **LIM report** is a document from your local council with everything they know about the
  property — building consents, resource consents, rates, flood risk, erosion risk, heritage status.
  You'd typically get one during due diligence when buying. It's not cheap ($300–$500) but it can
  save you from buying someone else's problem.

**What's in it:** Property details, consents issued, code compliance certificates, resource consents, rates info, hazard zones, heritage listings.

**Red flags to look for:** Uncompleted building consents (someone did work without finishing the consent process), flood or coastal erosion zones, contaminated land.

## Financial Documents

### Rates Notice

Your council sends this — it shows your property's rateable value and what you owe.

**What's in it:** Rateable value (land + capital), annual rates breakdown (general rate, targeted rates, water, wastewater), payment dates.

**Tax relevance:** Council rates are deductible against your rental income. Keep every notice.

### Mortgage Documents

The terms of any loan secured against the property.

**What's in it:** Lender details, loan amount, interest rate, term, repayment schedule, security details.

**Why it matters:** The interest portion is [fully deductible from April 2025](/blog/gotchas-101-interest-deductibility-nz) for most residential properties, but you need to track it for your tax return. Your bank's annual interest summary is the key document.

### Rental Income Statements

Records of rent received — either from your property manager or from your own bank account tracking.

**What's in it:** Tenant name, property address, period, amounts received, dates, management fees deducted (if applicable).

For tax-time record keeping, see [IRD Rental Records for New Zealand Landlords: What to Keep in 2026](/blog/ird-rental-records-new-zealand-landlords-2026), which turns Inland Revenue's 7-year record rule into a practical property folder model.

## Correspondence

### Council Correspondence

Anything the council sends you — consent applications, compliance notices, rates reminders, resource consent decisions. Some of these have deadlines for response, so don't just chuck them in a drawer.

### Body Corporate Minutes

If you own a unit title, body corp meeting minutes record decisions about the building — maintenance levies, long-term maintenance plans, insurance, rules changes. These affect your costs and your ability to manage the unit.

### Tenant Communications

Written comms with tenants — notice to remedy, 14-day notices, rent increase notices, inspection notifications. Under the [RTA](https://www.legislation.govt.nz/act/public/1986/0120/latest/DLM94278.html), some of these **must** be in writing and follow specific timeframes. Keep copies of everything — if you end up at the Tenancy Tribunal, your records are your defence.

## Keeping it All Together

  With 20+ document types across multiple properties, the key is having everything in one place
  where you can actually find it — and ideally something that tracks the deadlines for you. Manual
  systems (folders, spreadsheets, your memory) tend to hold up until the moment they don't.

Some practical approaches:

1. **Centralise everything** — one system, all documents, all properties. Not three folders, two email accounts, and a shoebox.
2. **Track dates** — lease expiries, insurance renewals, compliance deadlines. If the system can pull these from the documents automatically, even better.
3. **Make it searchable** — you shouldn't need to remember which folder you put something in. Search by property, by type, by date.
4. **Back it up** — whatever system you use, make sure there's a backup. Lost documents are expensive problems.

[AI document management](/blog/ai-document-management-property) tools like [ProppiAI](/blog/what-is-proppiai) can automate the classification, extraction, and search — but even a well-organised Google Drive is better than chaos.

## Investing Across NZ and Australia?

If you're looking across the Tasman, the document stack gets bigger — strata reports, stamp duty receipts, depreciation schedules, and more. Our [Property Investment Gotchas 101](/blog/gotchas-101-investment-strategies-new-zealand-and-australia) series covers the rules and costs in both markets, and the [New Zealand vs Australia comparison](/blog/gotchas-101-new-zealand-vs-australia) puts everything side by side. The reality-check companions go a layer deeper on what amateur landlords actually need from a tool: [What Amateur Property Investors Actually Need in New Zealand](/blog/what-amateur-property-investors-need-new-zealand) and [What Amateur Property Investors Actually Need in Australia](/blog/what-amateur-property-investors-need-australia).

For the current rule-change cluster, start with [Rental Rule Changes 2026: What New Zealand and Australia Landlords Need to Track](/blog/rental-rule-changes-2026-new-zealand-australia), then use the New Zealand tenancy, pet-bond, rental-record, and bright-line guides to build a property-by-property evidence file.


42-day notice (New Zealand)

A written notice under the New Zealand Residential Tenancies Act 1986 by which a landlord can end a periodic tenancy on one of the short-notice statutory grounds, giving the tenant at least 42 days to vacate.

ProppiAI Editorial Team, "42-day notice (New Zealand)", ProppiAI, 2026-04-16.

The 42-day notice is the shorter-period termination notice under the Residential Tenancies Act 1986 that landlords can serve on a periodic tenant in a narrow set of circumstances. The qualifying grounds include the property being sold with a requirement for vacant possession under an unconditional sale agreement, and the landlord or an employee of the landlord being required to live in the property.

Like the 90-day notice, the 42-day notice must be in writing, signed, and state the specific ground being relied upon. The tenant may apply to the Tenancy Tribunal to challenge a notice they believe is invalid or has been used on a ground that does not actually apply.

Before the 2020 amendments to the Act, landlords could rely on a 90-day "without cause" notice instead. That option no longer exists — termination of a periodic tenancy by the landlord now always requires a cited ground from the statutory list.


90-day notice (New Zealand)

A written notice under the New Zealand Residential Tenancies Act 1986 by which a landlord can end a periodic tenancy on one of the specified statutory grounds, giving the tenant at least 90 days to vacate.

ProppiAI Editorial Team, "90-day notice (New Zealand)", ProppiAI, 2026-04-16.

Since the 2020 amendments to the Residential Tenancies Act 1986, landlords can no longer end a periodic tenancy in New Zealand "without cause". Termination requires the landlord to cite one of the statutory grounds and give the tenant the minimum statutory notice — 90 days for most grounds, including the landlord or a family member moving in, extensive renovations, and change of use of the premises.

The notice must be in writing, signed, and specify the ground being relied upon. If the tenant believes the notice is retaliatory or that the stated ground is not genuinely being pursued, they can apply to the Tenancy Tribunal to have it declared invalid.

Shorter statutory notice periods apply to a small number of specific grounds, including the 42-day notice where the landlord has agreed to sell with vacant possession or a family member is moving in under an owner-occupier provision. Tenancy Services publishes template notices and the full list of grounds that landlords should reference before issuing a notice.


Bond lodgement (New Zealand)

The process of paying a residential tenancy bond to Tenancy Services within 23 working days of receiving it from the tenant, as required by the Residential Tenancies Act 1986.

ProppiAI Editorial Team, "Bond lodgement (New Zealand)", ProppiAI, 2026-04-15.

In New Zealand, a residential tenancy bond is capped at four weeks' rent and must be lodged with Tenancy Services — not held by the landlord. The Residential Tenancies Act 1986 requires the bond to be lodged within 23 working days of receipt, along with a signed bond lodgement form.

Tenancy Services holds the bond in trust for the duration of the tenancy. At the end of the tenancy, either party can request a refund; if there is a dispute, the bond is not released until the parties agree or the Tenancy Tribunal makes an order.

Holding a bond outside Tenancy Services, or failing to lodge within the statutory window, is a breach of the Act and can result in a work order or penalty from the Tribunal.


Bright-line test

New Zealand tax rule that treats profit from selling residential property within a set holding period as taxable income. The period is 2 years for properties acquired on or after 1 July 2024.

ProppiAI Editorial Team, "Bright-line test", ProppiAI, 2026-04-15.

The bright-line test is how Inland Revenue taxes short-term residential property gains in New Zealand. If you sell a residential property within the bright-line period that applies to your acquisition date, the profit is taxed as income at your marginal rate.

The period has changed several times: 10 years for properties acquired between 27 March 2021 and 30 June 2024 (5 years for new builds), and 2 years for properties acquired on or after 1 July 2024. The main home is generally excluded, and rollover relief can apply for some family transfers.

Bright-line is separate from the general land sale rules — a sale can still be taxable under those rules even if it falls outside the bright-line period.


Capital gains tax discount (Australia)

A 50% reduction in the assessable capital gain on a CGT asset held by an Australian resident individual or trust for at least 12 months before the CGT event.

ProppiAI Editorial Team, "Capital gains tax discount (Australia)", ProppiAI, 2026-04-15.

Where an Australian resident individual or trust holds a CGT asset for at least 12 months, the taxable portion of any capital gain on disposal is reduced by 50%. The discount is applied after capital losses have been offset and is one of the most significant features of Australian investment property taxation.

The 50% discount is not available to companies. Complying superannuation funds receive a one-third discount instead. For foreign and temporary resident individuals, the discount has been unavailable or restricted for accruals on or after 8 May 2012.

The 12-month holding period is measured from the contract date of acquisition to the contract date of disposal, not settlement dates.


Chattel list

An itemised schedule of moveable items and appliances included with a residential rental property, attached to a New Zealand tenancy agreement to record what the landlord is providing at the start of the tenancy.

ProppiAI Editorial Team, "Chattel list", ProppiAI, 2026-04-15.

A chattel list records the moveable items supplied with a tenancy — typical entries include the stove, heat pump, washing machine, curtains, and any furniture. It is usually attached as a schedule to the tenancy agreement, alongside a property condition record that notes the state of each item at move-in.

The chattel list is the reference point both parties use at the end of the tenancy when assessing wear, damage, or missing items for bond purposes. Without it, disputes about what was present and in what condition become much harder to resolve at the Tenancy Tribunal.

Tenancy Services publishes template agreements and inspection checklists that include a chattels section; landlords using their own template should ensure it still captures the same information.


Depreciation schedule

A report, typically prepared by a qualified quantity surveyor, that lists the deductible capital works and plant-and-equipment components of an Australian rental property so the owner can claim them on their tax return.

ProppiAI Editorial Team, "Depreciation schedule", ProppiAI, 2026-04-15.

A depreciation schedule splits an investment property's deductions into two streams: capital works deductions under Division 43 (the building structure and fixed improvements) and plant-and-equipment deductions under Division 40 (assets like carpets, appliances, and blinds). Each item is listed with an effective life and a deduction method so the owner can claim the correct amount each year.

For residential properties, the 2017 changes to Division 40 restricted plant-and-equipment deductions on second-hand items to the original purchaser of a new property (with limited exceptions). The schedule must reflect that restriction — a generic schedule prepared without regard to acquisition date will likely overstate deductions.

A compliant schedule is one prepared by a recognised professional such as a quantity surveyor, as required by the ATO's substantiation standards where the owner cannot self-assess construction costs.


An Australian tax deduction for the decline in value of removable plant and equipment in an income-producing property, claimable over the effective life of each asset.

ProppiAI Editorial Team, "Division 40 plant and equipment depreciation", ProppiAI, 2026-04-15.

Division 40 of the Income Tax Assessment Act 1997 lets owners of income-producing property depreciate removable plant and equipment — carpets, blinds, ovens, dishwashers, air-conditioning units and the like — over the effective life set by the ATO or self-assessed.

Since 9 May 2017, residential rental property owners can generally only claim Division 40 deductions on plant and equipment they purchased new, not on second-hand items that came with the property. The rule was introduced to prevent multiple investors claiming depreciation on the same asset as it passed between owners.

Division 40 deductions reduce each asset's adjustable value but do not directly adjust the building cost base for CGT, unlike Division 43 capital works.


Division 43 capital works deduction

An Australian tax deduction for the construction cost of the structural elements of a building used to produce assessable income, claimable over 25 or 40 years depending on construction date and use.

ProppiAI Editorial Team, "Division 43 capital works deduction", ProppiAI, 2026-04-15.

Division 43 of the Income Tax Assessment Act 1997 allows owners of income-producing buildings to deduct a portion of the original construction cost each year. For residential rental buildings, the deduction is generally 2.5% per year over 40 years, provided construction began after 17 July 1985.

The deduction applies to the structural elements — walls, floors, roof, permanent fixtures — as distinct from removable plant and equipment, which is handled under Division 40. Any Division 43 deductions claimed reduce the cost base of the property for capital gains tax purposes.

The original construction cost is used for the calculation, not the purchase price. Where that cost is not known to the owner, a quantity surveyor's report is normally required to establish it.