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New Property Tax Rules - What to Consider

The Government has made major changes to residential property taxing provisions.

When considering the rule changes note that:

  • interest deductions on a residential investment property acquired on or after 27 March 2021 will not be allowed from 1 October 2021,

  • the interest deductibility rules for properties acquired before 27 March 2021 will be phased in over four years,

  • There may be an exemption for residential investment properties that are new builds, details of this are not yet available,

  • the 10-year bright-line test applies to a residential property (other than your main home) acquired on or after 27 March 2021 (excluding new builds which are still a 5-year bright-line test).

In our view the age-old rule that ‘cash is king’ continues to apply, therefore the two key areas to focus on if you own residential investment property are:

  1. What is the cashflow impact of the tax changes on a monthly basis?

  2. When is your next debt review cycle with your bank and will this result in principal repayments? (If you are currently on interest-only loans)

If you decide to sell a residential investment property remember to check the implications of the bright-line test on that decision. See two fact sheets produced by the IRD on the new rules:

If you want to discuss your property tax strategy and property cashflow cycle please get in touch.

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