As the end of the financial year draws closer, Associate Finance Minister David Seymour announced some significant changes that will affect both landlords and tenants.
Changes to tax rules mean landlords will soon be able to write off their mortgage interest from April 1 with the government restoring deductibility.
“We are phasing back in the ability to deduct interest expenses from 1 April 2024 when all affected taxpayers will be able to claim 80% of their interest expenses and 100% from 1 April 2025 onwards.”
Interest deductibility relates to a landlord’s ability to claim mortgage interest as an expense.
So what that means is, if you own a rental property that has a mortgage on it, the interest you pay on that mortgage can be deducted from your rental income when it’s time to calculate your taxes.
Prime Minister Christopher Luxon, said National campaigned to reintroduce interest deductibility because it cared about renters.
“What has been utterly unacceptable is that there’s been a $170 per week increase in rents under the previous government, and they just kept going up and up and up.”
“A big reason for why they go up is because landlords have been hit with costs associated with the removal of interest deductibility, and also the extension of the brightline test. Those costs have just been passed straight through to renters with higher levels of rent.”
“We care about renters.”
If you have any questions about these upcoming changes, please get in touch with our Angels, we are here to assist both our landlords and tenants.