For Accountants

For Accountants

You manage the tax position. We establish the asset values.

Accurate depreciation calculations and purchase price allocations depend on reliable information about the assets involved.

For property investors, that means identifying the relevant assets, establishing their values and understanding how those assets fit within New Zealand’s depreciation and purchase price allocation requirements.

That’s the specialist work Valuit undertakes.

Since 1998, we’ve worked alongside accountants and property investors to provide the asset valuation information needed for depreciation assessments and commercial property transactions.

You look after the tax treatment. We’ll look after the valuation.

Residential Property Depreciation

The right asset values are the starting point.

Residential rental properties contain assets that may qualify for depreciation, even where the building itself is non-depreciable.

Identifying those assets and establishing appropriate values can be challenging, particularly when a property has been purchased as a complete investment rather than with separately identified asset prices.

Valuit provides specialist depreciation assessments that identify and value the relevant assets within residential investment properties.

Our reports provide a basis for accountants to determine the applicable depreciation treatment and maintain appropriate records.

Why recommend an assessment?

A specialist assessment can assist when:

›A client has recently acquired a residential investment property.

›No depreciation assessment was completed at acquisition.

›The original asset values are not separately identified.

›A client has completed significant improvements or refurbishment.

›The accountant requires supporting valuation information for depreciation calculations.

What about clients with rental losses?

Depreciation can remain relevant even where the client cannot immediately utilise the deductions.

Residential rental loss ring-fencing may defer the tax benefit, depending on the client’s circumstances.

For investors planning to hold property over the longer term, establishing the appropriate depreciation position remains an important consideration.

The objective is not simply to generate an immediate tax saving.

It’s to ensure eligible depreciation is properly accounted for over the investment period.

Commercial Property Purchase Price Allocations

The purchase price is only the starting point.

Commercial property transactions frequently involve multiple classes of assets with different tax treatments.

The purchase price allocation rules under sections GC 20 and GC 21 of the Income Tax Act 2007 introduce important considerations for both purchasers and vendors.

Establishing an appropriate allocation requires identifying the assets transferred and supporting the values attributed to them.

This is particularly relevant where a transaction includes land, buildings, separately depreciable fit-out, plant and machinery, and other property assets.

Where Valuit adds value

Valuit provides specialist asset identification and valuation assessments to support commercial property purchase price allocations.

Our work may include:

Asset identification

Identifying relevant assets and components within the property.

Ownership considerations

Reviewing available information, including leases, to help establish whether relevant fit-out belongs to the landlord or tenant.

Asset valuation

Establishing supportable values for identified assets using appropriate valuation methodology.

Classification considerations

Assessing asset characteristics relevant to determining whether items are separately depreciable or form part of the building.

Documented reporting

Providing valuation information to support the proposed allocation and subsequent tax analysis.

Why does the allocation matter?

For purchasers, the allocation may establish the tax cost of qualifying depreciable assets.

For vendors, it can affect depreciation recovery income and other tax consequences.

Where the parties agree on an allocation, the relevant PPA rules can restrict their ability to subsequently adopt different values.

A valuation completed before the allocation is finalised can provide important supporting information.

Common issues we help accountants address

1. Buildings and chattels grouped into one allocation

Where assets belonging to different property classes are combined into a single figure, the resulting allocation may not adequately distinguish depreciable property from buildings.

2. Separately depreciable fit-out

Not every item attached to a commercial building is necessarily part of the building for depreciation purposes.

Equally, not every item described as fit-out qualifies for separate depreciation.

Correct treatment requires consideration of the relevant asset characteristics and tax guidance.

3. Tenant-owned assets

Commercial properties frequently contain fit-out installed or owned by tenants.

Ownership must be considered before including assets in a purchase price allocation.

4. Building depreciation

The general depreciation rate for buildings with an estimated useful life of 50 years or more is currently 0%.

However, qualifying separately depreciable assets may still attract deductions.

5. Allocations agreed without supporting valuations

A purchaser and vendor may agree on an allocation without obtaining specialist asset valuation advice.

Where that allocation is subsequently questioned, establishing the underlying asset values can become more difficult.

A specialist valuation partner for your practice

Valuit has completed more than 64,000 property valuations since its establishment in 1998.

64,000+

Property valuations completed since 1998

Our methodology combines practical property assessment, specialist valuation knowledge, established systems and quality assurance.

We understand that accountants require more than a list of assets.

They need information that is appropriately supported, clearly presented and relevant to the tax work they undertake.

Our role is to provide that valuation information while respecting the distinction between specialist valuation work and professional tax advice.

When should you involve Valuit?

Residential property

When a client requires asset values to establish or review their depreciation position.

Commercial property

Ideally before the purchase price allocation is agreed or finalised.

Complex asset questions

When asset identification, ownership or valuation requires specialist assessment.

Let’s get the asset values right.

Whether you’re advising an individual residential investor or working on a substantial commercial property transaction, Valuit can provide the specialist valuation information you need.