Changes styming tax deductibility become law

This means landlords can no longer offset the interest costs they pay on mortgages as an expense against their taxable income if they bought a property after 27 March last year.

For properties bought before then change will be phased in over four years from the existing tax year until 2025. It will then fully apply to all rentals apart from new builds, property developments, properties leased to Kainga Ora and land businesses.

Property investors can claim 75% of interest costs in the 2022/23 tax year, 50% in the 2023/24 tax year and 25% in the 2024/25 tax year and then it is fully phased out.

The Taxation and Remedial Matters Bill passed its third reading on Tuesday, but the legislation applied from 1 October last year. The bill also extends the bright line test from five to 10 years. However, the test for new builds will stay at five years.