The ownership structure you choose for your rental property is an important decision and can have a material impact on how much tax you pay, the level of asset protection you have, and how flexible your structure is as your investment portfolio grows.
This guide provides a high-level overview of the most common rental property ownership structures in New Zealand, including when each structure is typically used and the key considerations investors should be aware of.
There is no single “best” ownership structure. The right option depends on your personal income position, risk exposure, long-term investment goals, and how many rental properties you own or plan to acquire.
Important note
This guide is intentionally high-level. After years of working with hundreds of rental property investors, we know it’s not possible to cover every scenario in a single article. The purpose of this page is to provide an overview of the rental ownership landscape in New Zealand, not to replace advice tailored to your individual circumstances.
Individual ownership
This is where the rental property is held in your own personal name.
All rental income and expenses are included in full in your personal tax return, with no additional registrations required. Any net rental profit is added to your other personal income and taxed at your marginal tax rate.
This is the simplest and lowest-cost ownership structure and is most commonly used by first-time investors who earn wages or salary and do not have significant personal risk exposure. It suits investors who value simplicity and low administration costs.
The main downside is that there is no legal separation between you and the property. Any legal or financial issues may expose the rental investment to personal risk, and there is generally less flexibility when refinancing or restructuring non-deductible personal debt.
Joint ownership
Joint ownership is commonly used by couples or partners purchasing a rental property together, typically with ownership split evenly.
Rental income and expenses are shared in proportion to ownership, and each owner includes their share in their own personal tax return. Each owner is taxed on their portion of the net rental profit at their individual marginal tax rate, based on their other income.
This structure is simple and cost-effective where both parties are comfortable with equal ownership. However, each owner remains personally exposed, with no additional asset protection beyond individual ownership, and limited flexibility when restructuring personal debt.
Company
A standard company is a separate legal entity and provides limited liability to shareholders in respect of the company’s obligations. However, this does not mean shareholders are fully protected from personal claims.
Accounting costs are typically higher due to additional compliance requirements. Companies can retain profits at the 28% company tax rate, but capital gains may become trapped within the company. For this reason, standard companies are rarely recommended for long-term rental investment.
Look-through company (LTC)
The property is owned by the company, but income and expenses flow directly through to the shareholders and are taxed at their personal tax rates.
LTCs are commonly used by investors who want the benefits of a company structure without the long-term complications of trapped capital gains on sale.
Trust
Trusts generally offer the highest level of asset protection but also come with the highest setup and ongoing costs.
Trusts are commonly used by business owners or individuals with higher personal risk exposure, as well as for long-term wealth and estate planning.
Getting the structure right
Most investors do not stay in the same ownership structure forever. It is common to start simple and move to more complex structures as income increases or portfolios grow.
If you want tailored advice before committing, see our rental property structuring consultation service. This is a fixed-fee service at $600 + GST.
You can also view our annual fixed-fee rental property tax filing packages here.