Tuesday, April 23, 2024

Rental relief is on the way

Associate Finance Minister, David Seymour, has today announced the Government will restore deductibility for mortgage interest on residential investment properties.

“Help is on the way for landlords and renters alike. The Government’s restoration of interest deductibility will ease pressure on rents and simplify the tax code,” said Mr Seymour.

“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. 

“Landlords have been hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations during a cost-of-living crisis. These costs are inevitably passed on to tenants, one of the reasons New Zealand has all time high rental costs. 

“This heaped pressure on landlords and renters alike by reducing the number of rentals, pushing rents up, and making it harder for Kiwis to save for their first home.

“Competition helps keep prices affordable. Reducing supply reduces the number of options and drives up prices.”

Removing the ability for landlords to claim interest expenses made residential properties less attractive and reduced the pool of properties for tenants to choose from, the Associate Minister said.

“To overcome New Zealand’s many challenges there needs to be an environment where investment and development is encouraged. This change is a step in the right direction,” he said.

The changes are expected to be added to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill, which is currently before the select committee.

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