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<p>On 23 March, the Government announced that deductions for interest expenses on rental properties will be restricted from 1 October 2021. The Ministers of Finance and Revenue today released a public consultation document seeking feedback on a range of design issues for implementing that proposal, including:</p>
<ul>
<li>
Interest on a mortgage on a residential investment property (acquired <strong>before 27 March 2021</strong>) will be gradually phased out between 1 October 2021 and 31 March 2025. Other interest would immediately cease to be deductible from 1 October 2021.</li>
<li>Land outside New Zealand would be excluded from the new rule as would a number of other types of properties.</li>
<li>Exemptions are proposed for property developers and for owners of new builds. In addition, initial or early owners of new builds would be subject to a five year bright-line test, rather than the ten year test.</li>
</ul>
<p>The proposals do not affect a person’s main home. For more information, see:</p>
<ul>
<li>
the Ministers’ <a href="/news/2021/2021-06-10-interest-deductibility-consultation-launched#statement">media statement</a>, and</li>
<li>the <a href="/publications/2021/2021-dd-interest-limitation-and-bright-line-rules">discussion document</a>.</li>
</ul>
<p>Also available are summary sheets briefly outlining specific topics covered in the discussion document:</p>
<ul>
<li>
<a href="/publications/2021/2021-fact-sheet-changes">Changes to interest deductibility</a></li>
<li><a href="/publications/2021/2021-fact-sheet-affected-parties">Who is affected by the interest deductibility changes?</a></li>
<li><a href="/publications/2021/2021-fact-sheet-affected-properties">What type of properties are affected by changes to interest deductibility?</a></li>
<li><a href="/publications/2021/2021-fact-sheet-new-builds">The treatment of new builds under the bright-line test and changes to interest deductibility</a></li>
<li><a href="/publications/2021/2021-fact-sheet-dev-exemption">The development exemption</a></li>
<li><a href="/publications/2021/2021-fact-sheet-gain-on-sale">Should interest deductions be allowed when property is sold?</a></li>
<li><a href="/publications/2021/2021-fact-sheet-bright-line">Changes to the bright-line test</a>
</li>
</ul>
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