New builds exempt from property tax changes
The New Zealand Government announced some major changes to the taxation of residential investment property in March 2021 – what might they mean for you?
Below are some key things to know. Of course, as mortgage advisers, we cannot provide investment advice or tax advice, or help you find the right investment property for your needs and goals. But we’re here for any mortgage-related questions you may have – please don’t hesitate to contact us.
‘New builds’ exempt to grow housing supply
With the new changes, the bright-line test has been increased from five to 10 years for residential properties acquired on or after 27 March 2021. Plus, the new tax rules (currently under consultation) would prevent interest deductions from being claimed for
residential investment properties, and this change is estimated to be phased in starting 1 October 2021.
However, it has been clarified that property developments and new builds are exempt from these changes. As Revenue Minister David Parker explained that this should “help boost supply by channeling investment towards increasing housing stock and away
from direct competition with first-home buyers and owner-occupiers for existing housing stock.”
In other words, as Minister of Finance Grant Robertson put it, the proposals aim to encourage more sustainable house prices and improve affordability for first-home buyers.
The measures, following the finalisation of finer details through a consultation period, are proposed to apply from 1 October 2021. To know more about the other changes, check out the government’s press release.
Planning a property move?
If you’re looking at purchasing an investment property and would like to know more about the tax implications, we recommend talking to an accountant or tax specialist. And of course, for any mortgage-related questions, keep us in mind. We’re here to help.
Sources:
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Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.
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