28 September 2021

The Government has released draft legislative proposals aimed at limiting the deductibility of interest incurred for residential property investments. We do not expect these proposals will change, and once legislated they will take effect from 1 October 2021.

Residential rental properties used for either short-term or long-term accommodation will be subject to the proposed rules. However, the following exclusions and exemptions are proposed:

  • exclusion for the main family home
  • exclusions for certain types of residential property, such as bed and breakfast in owner’s home
  • exemptions for new builds and for property development

 

These information sheets on the IRD’s website provide general information about how the proposed rules are intended to work:

  1. Interest deductibility proposals at a glance
  2. Properties not affected by the interest deductibility proposals
  3. How the rules work for certain entities
  4. Exemptions for property development and new builds
  5. How interest deductions are affected
  6. Changes to the bright-line property rule

 

Please contact us if you would like any assistance in reviewing how the Government’s announcements may impact your situation.

 

Related articles

11 June 2021: Update on Government’s property tax changes

23 March 2021: Bright-line test extended and interest deductions scrapped for investors 

 

Shelley-ann Brinkley Nexia Auckland
Written by Shelley-ann Brinkley

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