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Location is New Zealand. I have an agency that looks after a rental property for me, and they charge me management fee every two weeks.

  • The tenants pay the agency rent, the agency deducts their management fee and pays me the rest. So this management fee transfer has never shown up in my (bank) account.

I am wondering if this management fee is tax deductible? E.g. I can claim it as an expense.

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    Would it make any/much difference? You either claim the gross rent (what the tenants pay) as income, deduct the agency's fees (as an expense), and pay tax on the net rent (what you currently receive), or you claim the net rent as your income and pay taxes on that. Are you not paying taxes on the same amount in both cases? – TripeHound Nov 27 '18 at 16:14
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    Yes clearly it should be tax deductible, as soon as you stop under-reporting your income. – xyious Nov 27 '18 at 18:54
  • What income from the rental property are you declaring? The amount the agency sends you, or the amount they receive? – DJClayworth Nov 27 '18 at 21:07
  • @DJClayworth, the total amount they receive. – Yu Zhang Nov 27 '18 at 21:30
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The agency should definitely issue invoices for their service fees. Its an expense directly related to the renting business you operate so for me you both can and should claim it.

That being said, the way your question is phrased alludes to this being somehow an informal off-the-books agreement you have in which case you obviously can't claim for tax purposes. Other than that, the way you pay this fee doesn't have anything to do with the fact you pay it or your eligibility to claim it, so if you have a formal agreement with them, by all means, claim these expenses.

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    Just don't forget that the full amount of money the tenants paid the management company is your income and you must declare it. – David Schwartz Nov 27 '18 at 19:22

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