A reader asked whether non-load bearing walls, plumbing fixtures and fittings of their residential rental could be depreciated? Here’s our response

In a nutshell, the answer to the question, can you depreciate non-load bearing walls, plumbing fixtures, and fittings is “No”.

At a high level, if an item in a residential rental property is distinct from the building and it meets the definition of “depreciable property”, it may be separately depreciated. If an item is part of the building, it cannot be separately depreciated.Questions have arisen as to whether items relating to the residential property (eg plumbing and piping, electrical wiring, internal walls, and doors) are to be treated as part of the building or as items separate from the building. The IRDconsiders that it is not correct to break down a residential rental property into such separate items for depreciation purposes.


Instead IRD has a three step test for residential properties:

  1. Determine whether the item is in some way attached or connected to the building.
  2. Determine whether the item is an integral part of the residential rental property such that a residential rental property would be considered incomplete or unable to function without the item.
  3. Determine whether the item is built-in or attached or connected to the building in such a way that it is part of the “fabric” of the building. Consider factors such as the nature and degree of attachment, the difficulty involved in the item’s removal, and whether there would be any significant damage to the item or the building if the item were removed.


Following the three step test, IRD is of the view that the plumbing and piping, electrical wiring, internal walls, internal and external doors, garage doors (when the garage is part of the residential rental building), fitted furniture (wardrobes and cupboards built into the wall), kitchen cupboards, bathroom fittings and furniture, linoleum, and tiles (wall and floor) are not separate assets, but are part of the building. Wardrobes and cupboards not built into the wall, carpets, curtains, blinds and water heaters and hot-water cylinders can be regarded as separate from the building, so can be depreciated at a different rate.


See attached statement released from IRD. I have extracted the relevant pages. The full report can be viewed at



But there has been talk about bringing depreciation back for buildings. The Tax Working Group are looking into it at this moment.

Commercial properties: there is more scope for interior depreciation such as lifts, fire systems, etc. That’s one tax advantage of owning commercial properties. A

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