Holding a New Zealand rental in your own name keeps things simple and cheap, while a company or look-through company (LTC) adds structure, asset protection and a different tax rate. The right choice depends on your income, your other investments and how long you plan to hold.
The two options at a glance
When you buy a residential rental in New Zealand you can hold it personally (in your own name, or jointly with a partner) or through an entity such as an ordinary company or a look-through company (LTC). Each route is legal and common; they simply suit different owners.
- Own name — the property and its income sit on your personal IR3 return. Rental profit is taxed at your marginal rate, and any loss is ring-fenced (held back) against future rental income.
- Ordinary company — the property sits in a separate legal person that files an IR4 and pays a flat 28% company tax on profit. Getting money out to you is a second step.
- Look-through company (LTC) — a company for legal purposes but transparent for tax, so income and (subject to limits) losses flow through to you personally as if you held the property directly.
The headline trade-off is simplicity and cost against structure, protection and flexibility. There is no single right answer.
It also helps to know what does not change. Whichever option you pick, the rent you receive is taxable, the expenses of running the property are deductible, and any gain on a sale inside the bright-line window is taxed. The structure decides the rate, the paperwork and the protection around those rules; it does not switch the rules off.
Tax treatment compared
The tax outcome is usually the deciding factor, so it is worth being precise about how each option is taxed.
| Feature | Own name | Ordinary company | LTC |
|---|---|---|---|
| Tax rate on profit | Your marginal rate (up to 39%) | Flat 28% | Your marginal rate (flows through) |
| Return filed | IR3 | IR4 | IR4 plus flows to your IR3 |
| Rental ring-fencing | Applies to you | Applies inside the company | Flows through, still ring-fenced |
| Bright-line on sale | Applies | Applies | Applies |
Rental ring-fencing means residential rental losses generally cannot offset your salary, business or other income; they are carried forward against future rental income instead. This applies whichever structure you choose, so a company does not let you write rental losses off against a day job.
The bright-line test taxes the gain on a residential property sold within the relevant window after purchase, and it applies to companies and LTCs just as it does to individuals. Changing structure does not switch it off, and moving a property between you and a company can itself be a disposal that starts a fresh clock.
One subtlety worth flagging is interest deductibility. The rules on claiming interest on residential rental borrowing have shifted in recent years, and they apply by reference to the property and its acquisition date rather than the wrapper you hold it in. So moving a rental into a company does not, by itself, restore an interest deduction that the property would not otherwise get. We always check the current position for your specific property because this is an area that has changed more than once.
Cost and cashflow
Holding personally is the cheapest option by a clear margin. There is no separate set of company accounts, no annual companies-register filing, and your accountant's fee reflects one less entity. For a single rental that runs close to breakeven, that simplicity is hard to beat.
A company or LTC adds annual compliance: a separate IR4 return, financial statements, and the Companies Office annual return. On the cashflow side the big difference is the flat 28% company rate. If you are a high earner, profit taxed at 28% inside an ordinary company is lighter than profit taxed at 33% or 39% in your own hands, but only until you draw it out, when the rest of the tax falls due. An LTC gives no rate saving because profit is taxed at your personal rate regardless.
In plain numbers: a structure only saves tax where profit can sensibly be retained at the company rate. For a negatively-geared or breakeven rental there is little profit to shelter, so the company route mostly adds cost.
There is also the issue of getting profit out of a company. Retaining profit at 28% only defers the rest of the tax; when you draw it as a dividend or shareholder salary, the gap up to your personal rate is paid then. For a landlord who needs the rent to live on, that deferral benefit largely disappears, which is why the company rate helps high earners who can genuinely leave money in, and helps very little otherwise.
Risk and admin
The strongest case for a company is rarely tax; it is limited liability and a cleaner line between your personal assets and the rental. If the property carries risk, or you hold several, a separate entity can ring-fence that risk away from your home and savings. An LTC gives the same legal separation while keeping flow-through tax.
The admin cost of that protection is real. A company must keep its own records, file on time, and respect the line between company money and your own. Drawing funds out the wrong way creates overdrawn current accounts and interest charges. Holding personally avoids all of that, at the cost of having no liability shield.
Which suits which owner
- Single rental, modest income, long hold — own name usually wins on cost and simplicity.
- High personal income, profit you can retain — an ordinary company's 28% rate may help, if you can leave money in.
- Want flow-through tax but legal separation — an LTC bridges the two.
- Several properties or higher-risk tenancies — a structure for asset protection often justifies the admin.
Because the bright-line clock and ring-fencing follow you into any structure, the worst outcome is switching late and triggering an unintended disposal. It is better to choose deliberately at purchase.
Talk it through with us
The honest answer for most first-time landlords is that own name is fine, and a structure earns its keep only as the portfolio or the income grows. We can run your actual numbers against both routes, flag any bright-line or ring-fencing traps, and tell you plainly which one fits.
Book a free 20-minute review and we will give you a clear recommendation, with the reasoning, so you can decide with confidence.
This is general information only, not personalised tax advice. Your situation may differ, so confirm with us or check ird.govt.nz.
In plain English: hold in your own name unless higher income, more properties, or real risk makes a company or LTC worth the extra cost.
This is general information, not personalised tax advice.See our full disclaimer.