Loans - interest deductibility rules

[Xtina]

Hi, I need to do considerable repairs of circa $100k to my investment property due to weather damage. I have to borrow to finance the repairs. As the loan is not being used to purchase the property itself, am I able to deduct the interest for the new lending to pay for the repairs? Likewise if I have to draw on funds to pay rates and other bills.

[donna]

How long have you had the rental property?

Is it your first investment property in New Zealand?

Where are you located?

regards

Donna

[deechnz]

Kinda related..... I'm curious to know if National are still proposing to reinstate ability to claim loan interest (back in 2022 I think they said they'd do this if they win)?

[Perry]

The next National Government will stop Labour’s war on landlords, reverse Labour’s interest deductibility changes, and take the bright-line test back down to two years.

March 2023

[donna]

^^ you bet me to it Perry.

However this is a good discussion to watch especially as the election gets closer.

https://www.propertytalk.com/forum/forum/property-investment-forums/new-zealand/general-nz/734625-countdown-to-the-nz-election

[deechnz]

OK, so the National tax plan looks good, but the current Labour rule is that no tax deductibility was allowed for houses bought after 2021 (during Labour's phasing out). Whilst National have said that they are phasing it back in, they haven't specifically stated whether houses bought after 2021 are included. I mean, logic states that they will be, but it hasn't been stated. But from the logic, it means that houses bought after 2021 will go from (currently) zero tax deductibility to 50% as of next year? That's a pretty huge thing.

[donna]

Yes I think you've picked up on something that needs clarification - and GRA has a webinar with National on 26th September - and I will make sure Matthew checks up on this question. (see the GRA market update series banner above and register for the election specials - if you've not already registered).

cheers

Donna

[donna]

Hi deechnz,

I have a reply from Matthew Gilligan - who has both ACT and National as guest speakers on the upcoming webinars....

National have told me (via Paul Goldsmith MP) that they intend all houses to get interest deductibility back (including houses acquired before 2021.)

However they are phasing the deductibility back in over years, not kicking it off from the next financial year as you would expect. So National are in fact milking landlords with this envy tax for years to come.

It is therefore my view that (landlords and tenants) are much better to vote Act, as David Seymour is keen to get full deductibility from 1 April 2024, and has put this as a requirement of his coalition agreement with National.

Act will also repeal the abolition of no-cause tenancy termination notices, and wants Brightline repealed and gone. The reason I include tenants, is that these interest non-deduction rules cause rents to go up. So both landlords and tenants are better with Act.

Matthew Gilligan, For GRA

cheers,

Donna

[Frezzinghot]

Hi deechnz,

I have a reply from Matthew Gilligan - who has both ACT and National as guest speakers on the upcoming webinars....



cheers,

Donna

Looks like its Act then

[Perry]

Looks like its Act then

Frying pan or fire?
Devil or deep blue sea?

crACT are pro-GMO (as are crAtional, incl. the nasty pFizzer inoculant). Both signed comrade commissar Cindy's parliamentary pact to shun the Freedom Village protesters. (Don't take at face-value, the alleged pSeudoMour's pub chat with a hand-picked few.)

We are / remain faced with voting for the least bad of a totally unsavoury and scum-bag lot on offer.

Never forget: Winston-First-the-slippery gave us the dictator, comrade commissar Cindy.

[Frezzinghot]

Yes what to do aye