With interest deductibility gone for most investment properties there is going to be an exemption for new builds. Meaning that there will be less tax to pay on a brand new investment properties.
Currently the government is discussing the details of how the new tax rules will work, this should be finalised by October 2021.
What is considered a new build?
Apart from brand new properties, there might be other properties that might feel the love. Being discussed at the moment are these other ways to increase supply.
Possibly exempted properties:
- an additional dwelling is added to a property, whether stand-alone or attached
- renovating an existing dwelling to create two or more dwellings
- a dwelling (or multiple dwellings) replace an existing dwelling
- a dwelling is added to vacant land
- a dwelling converted from commercial premises such as an office block converted into apartments
Subsequent purchasers
Also being discussed is if subsequent purchasers of a property that is exempt should be able to carry on the same tax treatment. Time lines of 10 to 20 years are being discussed for this transfer of exemption.
How to make a submission
Submissions are invited on the options and proposals in this discussion document. http://taxpolicy.ird.govt.nz/publications/2021/2021-dd-interest-limitation-and-bright-line-rules
Your submission should include a brief summary of your main points and recommendations. Please also indicate whether officials from Inland Revenue may contact you to discuss the points raised, if required.
The closing date for submissions is 12th July 2021.
Submissions can be made:
by email to policy.webmaster@ird.govt.nz with
“Design of the interest limitation rule and additional bright-line rules” in the subject line; or
by post to:
Design of the interest limitation rule and additional bright-line tests
C/- Deputy Commissioner, Policy and Regulatory Stewardship
Inland Revenue Department
P O Box 2198
Wellington 6140
