Are Body Corporate Levies Tax Deductible in NZ?

If your rental is an apartment or townhouse in a unit title development, body corporate levies are probably one of your largest costs after the mortgage. In much of Auckland, from the city centre to newer townhouse developments, that covers a lot of investment property.

Whether you can claim those levies against your rental income depends on what the money is used for. This guide explains how to tell, as at August 2026. It is general information, not tax advice.

The short answer

Body corporate levies on a rental property are often deductible, but not automatically. The test is the same one that applies to any other spending on a rental: is it a running or repair cost, or is it a capital improvement?

• Running and repair costs are deductible.
• Capital improvements are not deductible as an expense.

Because one levy can pay for both, you sometimes need to split it.

Levies that are normally deductible

General levies that pay for the ordinary running of the building are normally deductible. These typically include:

• Administration and management, including the body corporate manager's fees.
• Building insurance arranged by the body corporate.
• Routine maintenance such as cleaning, gardening, lift servicing and fire safety checks.
• Repairs and repainting that maintain the building rather than improve it.
• Utilities for common areas, such as lighting in corridors and car parks.

These are the costs you would pay directly if you owned a standalone house: insurance, upkeep and repairs.

Levies that are not deductible

Levies raised to pay for significant capital improvements are not deductible as an expense. Examples include:

• Adding something new to the building, such as a new facility or an extension of common areas.
• Upgrading systems or finishes well beyond their original standard.
• Major works that change the building rather than restore it.

Those costs add to the value of the building, in the same way an extension would on a house.

When a levy covers both

The difficult cases are levies that pay for a mix of repairs and improvements. A large maintenance project might fix existing problems and upgrade parts of the building at the same time.

Where a levy relates to both, you must be able to reasonably determine the portion that relates to repairs in order to claim it. In practice, that means:

1. Read the levy notice and any explanation that came with it.
2. Check the budget approved at the annual general meeting, which should break down planned spending.
3. Read the meeting minutes for any special levy, which should describe the work being funded.
4. Ask the body corporate manager for a breakdown if the documents do not give one.

As an illustration, suppose your share of a special levy is $4,000, and the meeting minutes show the work it funds is $3,000 of repainting and repairs to existing balconies and $1,000 towards a new security system. The $3,000 repair share is likely to be deductible. The $1,000 for the new system is a capital improvement.

If the split is still unclear, or the amounts are large, ask a chartered accountant how to treat it.

Special levies and remediation

Some Auckland buildings have needed major remediation work, and owners have been asked for large special levies to fund it. The tax treatment of these depends heavily on the facts: what was wrong, what is being done, and whether the result is the building restored to its earlier condition or something better.

These are exactly the cases where professional advice is worth paying for. A mistake on a large special levy affects your tax far more than a routine quarterly levy.

Long-term maintenance funds

Most bodies corporate collect contributions to a long-term maintenance fund, which builds up money for work planned years ahead. Because that money is spent later, and the eventual work may be repairs, improvements or both, the treatment is less straightforward than for general levies. Confirm with your accountant how to treat these contributions.

Records to keep

For every rental in a unit title development, keep:

• every levy notice, with the period it covers
• the annual budget and the minutes of every general meeting
• any notice or explanation for special levies
• the long-term maintenance plan, which shows what future work the fund is for.

Our guide to keeping records for landlord tax covers the rest of what Inland Revenue expects, and Inland Revenue's page on residential rental property deductions explains how rental deductions are claimed.

Body corporate and property manager: different jobs

The body corporate looks after the building and common property. Your property manager looks after your apartment and your tenancy: finding tenants, collecting rent, inspections and maintenance inside the unit. Our guides to body corporate and property management and to strata management explain how the two work together.

The same repair-versus-improvement test applies to work inside your apartment, including Healthy Homes items. Our guide on whether Healthy Homes costs are tax deductible works through examples.

If you are reviewing the numbers on an Auckland apartment, a free rental appraisal gives you a current rent to set against the levies.