What’s Changing?
Starting from 1 April 2024, property owners in New Zealand will be able to claim 80% of the interest incurred on loans for residential property. This applies regardless of when the property was bought or the loan was taken out. Then, from 1 April 2025, the rules will fully revert to their previous state, allowing property owners to claim 100% of the interest incurred.
What Stays the Same?
Until full interest deductibility is restored, several aspects remain unchanged:
Property Types and Rules: The types of properties these rules apply to and how they work for different entities will not change.
Exemptions: The exemptions for land businesses, property development, and new build land will stay in place.
Disallowed Deductions (2021-2024): Any interest deductions that were disallowed between 1 October 2021 and 31 March 2024 will remain disallowed unless the property is sold and subject to tax.
When You Sell Your Property
If you sell a property, the rules for previously disallowed interest deductions still apply. Specifically, if your property sale is taxable under the bright-line property rule or other land sale rules, the disallowed interest can be included as part of the property's cost in the year you sell it.
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