CAN I CLAIM MY HOLIDAY AS A RENTAL EXPENSE?

Can I claim my holiday as a rental expense? You have a rental property, and you’re planning a trip to check on it. You’re wondering how much of that trip the taxman will help fund. The honest answer: there’s no such thing as a free trip. But there is such a thing as a genuinely tax-deductible one, if you do it properly.

30-Second Read

• Travel connected to your rental property can be tax-deductible, if you can show a genuine nexus between the trip and your rental business.
• To claim it, you generally need to be visiting your rental property, or travelling on the way to it. You also need to have pre-planned your business activities before you leave.
• Personal purchases made during the trip — that leather jacket you liked in Queenstown — aren’t deductible just because the trip itself is.
• Mixed personal-and-business trips need apportioning. Claim the business percentage of costs, not the whole trip.
• Keeping a proper travel diary is what actually protects your claim if IRD ever asks. See IRD’s own QB 22/06 for how they assess mixed business and personal travel.

The Nexus Test

The core question IRD asks is simple: what’s the connection — the nexus — between this expense and your rental business? If there’s a clear link, the expense is deductible. If there isn’t, it’s not, no matter how the trip itself is structured.

Here’s the classic example. Say you’re in Queenstown checking on your rental, and you see a nice leather jacket. You buy it. The trip itself might be 100% tax-deductible, because it meets every requirement below — but the jacket isn’t. What does a leather jacket have to do with your rental property? Nothing. No nexus, no deduction.

What You Need to Claim the Trip

To claim your holiday as a tax-deductible expense, you generally need to:

1. Be visiting your rental property, which sits in your holiday destination, or on the way to it.
2. Pre-plan your business activities before you go. Set up appointments with real estate agents, insurance brokers, accountants, lawyers, property managers or similar, before you leave. This makes the business purpose of the trip clear from the outset, rather than something claimed after the fact.

Once these conditions are met, your LTC, trust, or partnership can claim tax deductions for some or all of the trip. That includes associated costs — hotels, car hire, meals, and travel.

Keep a Proper Travel Diary

A travel diary is the single best way to prove the business portion of your trip. Alongside your invoices, receipts, and tickets, keep records of:

• the date of the trip
• your itinerary
• the cost of car hire, and air, bus and taxi fares
• the cost of accommodation, meals and incidentals
• the time spent on business versus non-business activities
• letters of introduction
• business contacts and cards collected
• firms visited
• the business conducted, or the reason for each visit

This is exactly the kind of documentation we cover in more depth in what records you need to keep — and given how much more active IRD has become on compliance in recent years, a travel claim without solid records behind it is exactly the kind of thing that invites a closer look.

Don’t Go Overboard

Tax concessions are assessed against what a hypothetical “reasonable person” would do. A reasonable person doesn’t eat at the swankiest restaurant every single night of a work trip. Maybe once, but not as a matter of course. Keep your claims proportionate to what a genuine business trip would actually cost.

Apportioning Mixed Trips

Say you travel to inspect your rental, meet suppliers, and look at another potential purchase — with 3 days of pre-planned business appointments, and the rest of a 10-day trip spent resting. You can’t claim the entire trip. Work out the business proportion — 3 out of 10 days, or 30% in this example. Claim that percentage of your costs instead of the whole amount.

Can I Claim for My Partner? My Kids?

Generally, no — not without a genuine business reason for them being there. Your children are unlikely to be active participants in your LTC or trust. Their costs would typically need to be excluded entirely.

Your spouse or partner is a different question. Are they actively involved in the business? A director of the company, a trustee of the trust, or genuinely part of the taxable activity? Is whoever you’re meeting at your destination expecting to meet both of you specifically? If so, there’s a real case for including their costs. If they’re just along for the trip, there generally isn’t.

Worked Example

Nina travels to inspect her rental and meet potential new tenants’ property manager. Nina books her flights and accommodation two months ahead, and sets up meetings with her property manager and a local tradesperson to quote on repairs before she leaves. Her 6-day trip includes 4 days of pre-planned business activity and 2 days of rest. She keeps a travel diary noting each meeting, the businesses visited, and receipts for every cost. She claims 4/6 (roughly 67%) of her flights, accommodation, and car hire as a business expense. She doesn’t claim the bottle of wine she bought as a souvenir, though, since that has no connection to her rental business at all.

Checklist

• ✅ Confirm your trip genuinely involves visiting your rental property, or travelling on the way to it
• ✅ Pre-plan and book business appointments before you leave, not after you arrive
• ✅ Keep a travel diary covering dates, itinerary, costs, and business purpose throughout the trip
• ✅ Separate personal purchases from business costs — a nexus to your rental is required for every claim
• ✅ Work out the genuine business proportion of a mixed trip, and only claim that percentage
• ✅ Talk to us before you travel, not after, so your trip is structured to support the claim from the outset

Common Questions

What if I don’t pre-plan my business activities before I travel? It significantly weakens your claim. Pre-planning is exactly what demonstrates the trip was genuinely for business. It’s the difference between that and a holiday you’re trying to retrofit a business justification onto.

Can I claim 100% of a trip that’s mostly personal? No. Only the portion genuinely connected to business is deductible. A trip with 3 business days out of 10 gets roughly 30% of costs claimed, not the whole amount.

Does this apply the same way to LTCs, trusts, and partnerships? Yes. The same nexus principle applies regardless of which structure holds your rental property.

What happens if IRD queries my travel claim? This is exactly where a proper travel diary and records matter. Without them, a legitimate claim can be hard to defend even if the trip genuinely was for business. And that’s why it’s a good idea to always take up Audit insurance.

Summary

Can you claim your holiday as a rental expense? Sometimes, and often quite legitimately — but only the genuinely business-connected portion, supported by proper records. Pre-plan your business activities, keep a real travel diary, separate personal purchases from business costs, and apportion mixed trips honestly. Get this right, and a trip to check on your rental can genuinely offset some of its cost. Get it wrong, or skip the record-keeping, and you’re relying on a claim that won’t hold up if IRD asks.

Talk to EpsomTax.com Before You Travel

This is one of those areas where planning ahead makes all the difference — please, please contact us before you go, not after. Contact EpsomTax.com to structure your trip properly before you book it. We work with New Zealand property investors every day. We can help make sure your travel claim is genuinely defensible, not just hopeful.