On Tuesday March 29, 2022, the Government passed the Bill which extended the Bright Line Test to ten years and remove ability of rental property owners to claim mortgage interest as a tax deduction.
Removal of mortgage interest as a tax deduction will be of particular concern to many rental property providers.
What are the tax changes?
Unless it is a new build or social housing rental, interest cannot be claimed as an expense from 1 October 2021 for rental property purchased on or after 27 March 2021.
For property acquired before 27 March 2021, interest deductibility on existing loans is being phased out over 4 years. Interest deductions for any new loans drawn down on or after 27 March 2021 is not allowed from 1 October 2021 onwards.
Use the NZPIF calculator to see interest rate percentages you can claim over the next few years.
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