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Deductibility of Farmhouse Expenses

IRD have released a Statement considering the deductibility of expenses relating to a farmhouse that forms part of a farming business. The general rules of deductibility and apportionment applies, ie you will be able to claim a percentage based on values and usage.

However, the minimum deduction of 25% for all farmers has been reduced to, and now available only in situations where the compliance cost of calculating private use element outweighs any likely deductions,  20% for farmhouse expenses ie power, while rates and interest remains at 100%. These deductions are allowed for some sole traders and partnerships when the value of the farmhouse is 20% or less than the total value of the farm. If the value of the farmhouse is more than 20% of the total value of the farm, all expenses that relates to both the farm house and the farm (rates, insurance, power, interest) must be apportioned.