The return allows you to enter and review each residential property separately, showing its individual income, expenses, and result. This is intentional, giving you the ability to verify the figures for each property on their own.

New Zealand's residential property loss ring-fencing rules do not assess properties individually. Instead, they apply at a single grouping level that you determine.

This article explains the reasoning behind that design, how the figures displayed on screen are calculated, and, using real examples of the data submitted to Inland Revenue, shows exactly what changes between the property-level view and the final total reported in the return.
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Residential rental income and expenses are subject to the ring-fencing rules in section EL 3 of the Income Tax Act 2007. Where total residential rental deductions exceed total residential rental income, the excess loss is ring-fenced. This means it cannot be used to reduce tax on other types of income, such as salary or business income, in the current year. Instead, the loss is carried forward and can be used to offset future residential rental profits.

The rules do not prescribe how residential properties must be grouped for testing. In the return, this is determined by the Calc Basis field.

The Calc Basis is set once and applies to all residential properties entered for that client. The way losses are calculated, displayed, and reported throughout the return is determined by this single setting.
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Whichever Calc Basis is selected, the return always displays each property's individual details, including its address, income, expenses, deductions claimed, and net result. This per property view is designed to help you review and verify the data entered for each property.

The ring-fencing calculation, however, is applied only once at the unit defined by the Calc Basis. Under Portfolio, all residential properties are combined and assessed as a single group. Under Individual, each property is assessed separately. The outcome of that calculation is what is ultimately reported to Inland Revenue through the return payload.

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The property-level figures shown on screen are provided for review purposes. The amounts reported to Inland Revenue, including deductions claimed, net income, and excess deductions carried forward, are calculated by applying the ring-fencing rules at the level specified by the Calc Basis.

Each example begins with the property-level view shown in the return and then shows the payload sent to Inland Revenue, illustrating how those figures are reported for that scenario.

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Four properties on the Portfolio basis. Two make a profit, two make a loss:

Calc Basis: Portfolio; four properties as entered in the return

Total deductions available ($33,108.35) are less than total income ($48,307.75), so nothing is capped, the portfolio simply claims everything and reports the net profit:

Same four properties, but Property B needed an extra $20,000 of repairs this year:

Property B's own figures under Portfolio basis, deductions claimed still shows the full $21,848.73, and net income is allowed to go negative on this line

Look closely at the total row: 'Deductions available' is $53,108.35, the straight sum of all four properties but 'Deductions claimed' is $48,307.75. The portfolio's deductions claimed is capped at the portfolio's own total income. The $4,800.60 that couldn't be claimed this year is carried forward instead:
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A client can have only one residential property and still use the Portfolio basis, the return treats a single property as a portfolio containing one item. With no loss, nothing is capped:

Give the same property an extra $20,000 of repairs, and the same capping rule from Section 4.2 applies, the property's own figures still show the full deductions available, but the reported total is capped to income:

Even with just one property, the property's own deductions claimed field and the reported figure differ ($21,848.73 vs $15,080.00). This confirms the capping is about the calculation unit, one property, or many, not about having multiple properties to net off.

Same four properties, but the client has chosen the Individual basis. Now the capping happens on every property separately:

Property A under Individual basis, deductions claimed is capped to Property A's own income, with its own excess carried forward.

Property A and Property C each have their own deductions capped to their own income, and their own excess carried forward $2,190.94 and $12,835.04 respectively, rather than that being absorbed by Property B and D's profits. The reported total simply adds up each property's already capped result:
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Compare the two totals for the exact same four properties:

Same properties, same numbers entered, a $15,025.98 difference in taxable income, purely from the Calc Basis choice. This is the number worth checking with a client before the return is filed.

With only one property, Individual and Portfolio produce an identical result, because there's nothing else in the calculation to offset against:

The same single property as Section 4.3, under Individual basis identical figures.

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Compare this block to Section 4.3's second payload, they're identical except for the indicator value. For a single property, the Calc Basis choice makes no difference to the result.