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<p>The Government has today released draft legislative proposals aimed at limiting the deductibility of interest incurred for residential property investments. The proposals are contained in Supplementary Order Paper No 64.</p>
<p>In summary, residential investment properties capable of being used for long term accommodation would be subject to the proposed rules. However, the following exclusions and exemptions are proposed:</p>
<ul>
<li>an exclusion for the main family home</li>
<li>exclusions for several types of residential property, and</li>
<li>exemptions for new builds and for property development.</li>
</ul>
<p>A set of information sheets is available providing general information about how the proposed rules are intended to work.</p>
<p>The Supplementary Order Paper also contains a proposed five-year new build bright-line test, a new option for calculating fringe benefit tax and a proposal to clarify the application of the business continuity test for carrying forward losses.</p>
<p>Parliament's Finance and Expenditure Select Committee will consider the proposals and is expected to call for public submissions. The proposals will generally have application from 1 October.</p>
<p>For more information on the proposals, see the Ministers' <a href="/news/2021/2021-09-28-interest-limitation-proposals#statement">media statement</a>, <a href="https://legislation.govt.nz/sop/government/2021/0064/latest/whole.html">Supplementary Order Paper</a>, <a href="http://disclosure.legislation.govt.nz/sop/government/2021/64/">supplementary departmental disclosure statement</a>, <a href="/publications/2021/2021-ris-interest-deductibility">regulatory impact statement</a>, and the <a href="/publications/2021/2021-other-interest-limitation">information sheets</a>. A supplementary commentary providing more detailed information on the proposed amendments included in the SOP will be published in early October.</p>

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