Are Healthy Homes Costs Tax Deductible for Landlords?

The Healthy Homes standards have pushed most New Zealand landlords into work on their properties. A common follow-up question is whether that work can be claimed against rental income. The answer is: some of it, depending on whether the work is a repair or an improvement.

This guide explains how that line is drawn, with practical examples, as at July 2026. It is general information. For anything other than a straightforward repair, talk to a chartered accountant before you file.

A quick recap of the standards

The Healthy Homes standards set minimum requirements for every residential rental in New Zealand in five areas:

• heating
• insulation
• ventilation
• moisture ingress and drainage
• draught stopping.

All rental properties must meet all five, including long-standing tenancies where nothing in the agreement has changed. Tenancy Services publishes the detail of each standard on its Healthy Homes pages, and our guide to the Healthy Homes standards for Auckland landlords covers what compliance looks like in practice.

The benchmark: the day you acquired the property

The tax rule is simple in theory. The condition of the property on the day you acquired it sets the benchmark.

• Spending that gets the property back to that condition is a repair, and generally tax deductible.
• Spending that improves it beyond that condition is a capital improvement, and not deductible as an expense.

Healthy Homes work does not have its own tax category. Each job is judged against that benchmark like any other maintenance.

Repairs you can generally claim

Work that fixes or restores something the property already had:

• Repairing a broken extractor fan that was already installed.
• Repairing an underfloor moisture barrier that has degraded over time.
• Fixing a faulty heat pump or replacing a broken part.
• Replacing worn draught stopping around existing doors and windows.
• Clearing and repairing existing gutters and downpipes that are not draining properly.

Improvements you cannot claim as an expense

Work that adds something new, or makes something better than it was:

• Installing an extractor fan where there was none.
• Upgrading an existing fan that is not powerful enough to meet the standard.
• Installing a new underfloor moisture barrier where none existed.
• Adding insulation where there was none, or topping it up beyond the original level.
• Installing a new heat pump to meet the heating standard.

These are capital costs. They add to the value of the property rather than maintaining it.

Capital does not always mean nothing

Some capital items can still be claimed over time through depreciation.

• Assets in their own right, such as a heat pump, can generally be depreciated over their useful life, so part of the cost is claimed each year.
• Low-value assets costing $1,000 or less can be fully deducted in the year you buy them, instead of being depreciated.
• Work that becomes part of the building, such as insulation, generally cannot be depreciated, because residential buildings have no depreciation allowance.

Our guide to depreciation and capital improvements explains how those rules work.

Buying a property that does not comply

If you buy a property that needs work before it can be let, the cost of bringing it up to the required standard before it is rented is generally capital. That includes substantial repairs, such as a roof, and Healthy Homes items that did not exist at purchase, such as a new moisture barrier.

The logic follows the benchmark: the property was in that condition when you acquired it, so the spending improves it rather than restoring it. Factor compliance costs into your offer when buying a rental that does not meet the standards.

When a job is a mix of both

Real jobs are often mixed. An electrician might repair two existing fans and install a new one in the same visit. A builder might repair part of the subfloor and lay a new moisture barrier in the same week.

To make the split possible:

1. Ask for itemised invoices that separate repair work from new installation.
2. Photograph the before and after, especially for work under the house or in the roof space.
3. Keep your compliance statement and any assessment report, which show what existed at the time.
4. Note the date you acquired the property against each job.

If the work is a mixture of repairs, upgrades and new installations, have a chartered accountant review the split. That is the area where Inland Revenue is most likely to ask questions.

Planning the work sensibly

Not every Healthy Homes job needs to cost a fortune, and some spending is far better value than others. Our guide to Healthy Homes on a budget covers where to spend and where you can save.

Ongoing maintenance of compliant items is generally deductible, which is one reason regular inspections pay for themselves: a fan or a barrier repaired early is a small deductible cost, not a replacement. If you would like that handled for you, our process explains how we manage maintenance and compliance. And if you are deciding whether to upgrade a property before re-letting it, a free rental appraisal will show what the work could do to the rent.