Q. I am considering buying a property that has a gas and oil pipeline running through the land. What should I be aware of from a legal point of view and what advice do I need?

A. Where a property has an established gas and oil pipeline running through it, there will inevitably be an existing easement registered to the property title to enable the pipeline owner to manage and maintain it in the future. The pipeline’s owner will have a right to access and use land subject of the easement for activities associated with the pipeline, but you retain ownership of the land subject to the restrictions imposed by the easement.

Before purchasing the property it’s important you understand the scope of the easement and any restrictions imposed by it. This will enable you to understand which areas of the property are affected by the easement and what activities may be restricted. Given there will likely be restrictions, you should consider your intended use of the property and whether the easement affects that use (now or in the future). You should also consider any pipeline environmental impacts that could affect the property’s value, including obligations on the pipeline’s owner to remediate the land once the pipeline is no longer in operation.

Beyond practical use of the property, you should ascertain if specific insurance is required and if any liability may attach to you, as landowner, in the event of an incident and whether there is an agreement on pipeline royalties. Given factors around a pipeline on a property, coupled with the specific nature of easements, we recommend engaging a lawyer to undertake comprehensive due diligence. We also recommend you investigate insurance options.

- Shane Campbell

Shane Campbell A partner in Wynn Williams’ Dispute Resolution Team, Shane specialises in complex commercial disputes. He acts on property disputes, product liability, defective buildings and professional negligence including claims for and against lawyers, architects, accountants, engineers, valuers and property managers.
wynnwilliams.co.nz

Q. I manage a house with a tenant who owes a lot of rent and recently got a tenancy tribunal order terminating their tenancy in two weeks. However, I’m considering giving them a probationary period to improve. Despite their poor communication and payment history, they’re still in the property and making excuses for the arrears. Re-renting the property could be challenging, potentially leading to a long vacancy period. How long can I use the termination order if I decide to give them a chance to catch up on rent, but they don’t improve? Will the termination order become obsolete if I extend their chance beyond the termination date?

A. According to the Residential Tenancies Act 1986, you can’t file a possession order if it’s been more than 90 days since the date of the tenancy tribunal order. Specifically, Section 64 (sections 2 and 4) of the RTA outlines this time frame. It’s crucial to consider this limitation if you’re contemplating extending the probationary period for the tenant.

- Ryan Weir

Ryan Weir Ryan is managing director and franchisor of Propertyscouts NZ. He’s deputy chairman of the RPMA and is passionate about the property management industry, particularly raising industry standards.
propertyscouts.co.nz

Q. We have a new build rental property which is 100 per cent deductible. However, under the ring-fencing rules we cannot offset the expense to our PAYE incomes so the losses are currently being carried forward as tax credits. I’m considering going full-time contracting which would allow me to piggy-back off the rental tax credit. Is this achievable and are there any other tax implications?

A. We should clarify the terminology first before answering your question. Ring-fenced losses are not tax credits. They cannot be refunded. Ring-fenced losses can only be used to offset rental profit derived from your residential rental properties or taxable profit from bright-line gains. Excess ring-fenced losses will be carried forward to offset rental profit in future years. Unfortunately, you won’t be able to utilise ring-fenced rental losses against your contracting or PAYE income.

- Stephen Tsang on behalf of Mark Withers

Stephen Tsang Stephen and his team specialise in advising on property-related transactions, valuation and restructure services, and tax planning. Withers Tsang, phone 09 376 8860, www.pfkwt.co.nz

Q. Six months ago I bought a newly built property and rented it out. A property management company is handling the property for me. I’ve received an end-of-year statement from them, along with all the expense bills. Given the higher interest rates, I am currently paying the mortgage out of my own pocket. Should I file the taxes by uploading these documents or would it be more prudent to use an accountant?

A. Easy answer here – use an accountant. The tax rules in relation to rentals are not straightforward, and unless you are familiar with them and keeping up with changes as they occur, you risk making an error. A good property accountant, who is also a tax adviser, will be abreast of the current rules and will ensure you are not only complying with the law but also optimised from tax and asset protection perspectives.

- Matthew Gilligan

Matthew Gilligan Matthew Gilligan is a property investor, developer and tax adviser. He is managing director of chartered accounting firm Gilligan Rowe & Associates, where he heads the specialist property and asset planning divisions.
gra.co.nz

Q. We are about to build an extension. We have $45,000 in savings (as we are already paying max on mortgage). When we get the building loan are we best to keep that $45,000 and use it towards the build or use it to pay off the mortgage when it comes up for renewal and we come off our 2.69 per cent interest rate?

A. There isn’t a huge difference between the two options. However, I would say that as a build loan is generally on a floating rate (which is higher than fixed rates presently) then there is probably a small financial benefit to use the funds to reduce the build loan size rather than reducing your existing mortgage and having a larger build loan.

- Kris Pedersen

Kris Pedersen Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. Phone 09 486 4719, www.krispedersenmortgages.co.nz