While we are living & working overseas (currently in Canada) we are renting out our home back in New Zealand so as to at least cover the interest on our mortgage.

With tax return time approaching in NZ - the New Zealand tax year runs from 1st April to 31st March of the following year, and returns must be filed by 7th July - one of the additional calculations this year will be to account for the extra rental income. I already do the returns for our investment property myself so this was supposed to be easy. But the other day I read an article in the NZ Herald - “Traps in renting out your house“. There was a paragraph that caught my eye:

“First, you’ll have to pay tax on any profit on renting out your house, after deducting expenses such as rates, insurance, routine maintenance and depreciation of chattels.
And you won’t be able to tax deduct your mortgage interest. The deductibility depends on why you took the loans out in the first place, and that was to finance your home, not a rental property.”

Whooaa! This would mean that any mortgage interest we’d paid while renting out our home would not be deductible leaving us to pay tax on the full rental income received! That would have been 000’s of dollars in our case - Screwed! We expected the rental income to cover our interest expenses while away.

This didn’t sound right so I asked about it on Propertytalk.com. Surely enough the readers pointed out that the article was incorrect. In short:

“The test for deductibility is, is the expense incurred, while deriving taxable income.

The rental income is taxable, the expense of the mortgage is incurred while deriving that taxable income, therefore the mortgage expenses are deductible.“

Naturally you cannot claim the interest if you’re still living in the house but for all you going overseas and thinking of renting out your house - breathe a sigh of relief, and never trust a journalist.

No time for a proper weekly update today. It occured to me that going on holiday means that I won’t have time next week to finish all the stuff at work that I’d d said I’ll finish so I’ve been flat out over the last few days trying to squeeze in next weeks deliverables…going on holiday is a lot of work…

• Last weekend spent in Seattle was awesome. I thought the city has a really cool vibe - a bit like Melbourne and Montreal. We really liked how Seattle (unlike Vancouver) was able to protect it’s heritage buildings - giving the city a very unique feel. Looking down from the Space Needle reminded us both of Auckland and Aggie got a bit homesick There will be pictures of the trip up on her website after we come back for sure.
• On Tuesday we went to see Cake in concert. Read about it on Aggie’s blog.
• No technical or other interesting stuff today .. sorry, no time!
• Cuba - Here we come!

As usual it’s been a pretty busy week…

• Cuba is now ONE WEEK away! My PADI certification replacement card arrived this week. I ordered it online from this link - didn’t need my number or photo or anything else - the system looks it up for you and you pay $30USD by credit card and they send it to the address you specify - it arrived in less than a week. I think this means we’re going diving after all - nice.
• PHP & gmaps I’ve been spending time learning PHP and trying to figure out how to best get GoogleMaps working for a pet project of mine (it’s todo with our big North America road trip later this year). I’m really enjoying PHP although it’s been going pretty slooow… So little time, so much to do…Hopefully I can have something up next week.
• DIY-Renovations. It’s been a while since we did any kind of renovations.. Our withdrawal symptoms include maniacally watching the HGTV channel and drooling over hardware store fliers with pictures of laser guided compact saws and single-handed routers. “You’re sure we won’t have space for a this cool nail gun in our luggage?”… Anyhoo, we got pretty excited when somebody forwarded us this palatial renovation project.. literally.
• Stock Market Stocks were all over the place this week. Quick summary of the few I’m interested in:
  Symantec (SYMC) +14.41%
  Air Products and Chemicals (APD) -3.35%
  Market Vector Russia ETF(RSX) +8.67%
  So overall a very good week for our equities - thanks to Symantec’s stellar financial quarter results and the rising price of oil…but gas prices suck like a brick…
• Working Holiday in Poland New Zealand signs working holiday deal with Poland. Poland’s on a roll. They signed one with Canada after the Robert Dziekanski incident and now New Zealand. Those kiwis better brush up on their Polish - can you say “Poprosze kielbase i pierogi”…

For the weekend we’re off to Seattle - Aggie wants to go shopping..*sigh*
Have a good one - Remember Mother’s Day!

Aggie and I watched Michael Moore’s Sicko last night. A crazy film, about the insanity that is the American health care system. Highly recommended. The documentary opens with a guy describing how he lost the tips of two of his fingers in his hand in a table-saw accident.. and how the hospital presented him with options - reattach his ring-finger for $12,000 or his middle finger for $40,000…which one can you afford?

The film is both shocking and hilarious - makes you realise how good (normal) we have it back home in New Zealand, and in Canada and anywhere else in the world really..like Cuba etc. with free or near-free health care. Americans have really drawn the short straw on this one. Prime example of how capitalism can be taken one step too far. It’s quite scary to think about the meltdown this will create in the next couple of decades as the US population ages and more and more people start falling sick. It will either collapse their current system or you will wish you had secretly invested in some of those medical companies as they rob those poor people blind from their pensions and life savings.

We just need to make sure we have real good medical insurance before going on our road-trip to the US in the second-half of the year. Wouldn’t want to have to choose between any fingers…