Greenlion Summarise the Key Points of the Limitation of Interest Deductibility on Residential Property Investment

Earlier this week the Government released draft legislation outlining some detail in relation to the March interest limitation proposals. The proposals are contained in Supplementary Order Paper No. 64 

 

As an overarching principle, residential investment properties capable of being used for long term accommodation would be subject to the proposed rules. However, the following exclusions and exemptions are proposed: 

an exclusion for the main family home 

exclusions for several types of residential property, and 

exemptions for new builds and for property development. 

 

Existing property: 

Property acquired on or before 27 March 2021 will be subject to a phasing out of interest deductibility over the period 1 October 2021 and 31 March 2025. 

Land outside New Zealand would be excluded from the new rule. 

As mentioned above exemptions are proposed for property developers and for owners of new builds. 

 

New Builds: 

A new build for these purposes are proposed to be: 

a dwelling added to vacant land 

an additional dwelling added to a property, whether stand-alone or attached 

a dwelling (or multiple dwellings) replacing an existing dwelling 

a dwelling created by renovating an existing one to create 2 or more. For example, turning a 6- bedroom dwelling into 2 3-bedroom dwellings (both with their own bathrooms and kitchens) 

a dwelling converted from commercial premises. For example, an office block converted into apartments. 

 

These rules are complex. Submissions on the Supplementary Order Paper and the Bill will likely be heard by the Finance and Expenditure Select Committee in the coming weeks, so if you do have any questions about how the proposed changes affect you, Greenlion are there to help you.   

 

With this in mind, please take a moment to find out more about bookkeeping companies and accounting firms Auckland by visiting the website at https://www.greenlion.co.nz .