Today the government announced new proposed policies that will affect residential properties as a measure to try and combat the housing crisis in New Zealand
From 1 October, any residential property acquired on or after 27 March 2021 where the property is not the owner’s main home, will be subject to a 10 year bright-line test. Newly built homes will still only be subject to a 5 year bright-line test.
Also, from 1 October, any interest from any loan used to acquire, maintain, or improve a residential rental property on or after 27 March 2021, will be non-deductible. For any loan before this date, the government will phase out the deductibility of interest based on the table below:
|Date||Percentage of interest you can claim|
|Up to 30 September 2021||100%|
|1 October 2021 - 31 March 2023||75%|
|1 April 2023 - 31 March 2024||50%|
|1 April 2024 - 31 March 2025||25%|
|From 1 April 2025 onwards||0%|
There have also been some rules put in place around the change of use of a main home in relation to the bright-line test. For residential properties acquired on or after 27 March 2021, if a property switches to or from being a main home, and the period of change is 12 months or less, it will not be counted as a change of use.
Any property sale subject to the change of use rule will need to pay income tax on the profit based on the proportion of time the property was not being used as the owner’s main home.