6 Important Changes to Interest Limitation Rules You Need to Know

6 Important Changes to Interest Limitation Rules You Need to Know
(𝘍𝘳𝘦𝘦 𝘊𝘢𝘭𝘤𝘶𝘭𝘢𝘵𝘰𝘳 𝘓𝘪𝘯𝘬 𝘉𝘦𝘭𝘰𝘸)

Claiming interest as an expense for residential property in New Zealand is being phased back in. Here are 𝟲 𝗸𝗲𝘆 𝘁𝗵𝗶𝗻𝗴𝘀 to keep in mind:


𝟭. 𝗣𝗵𝗮𝘀𝗲𝗱 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗗𝗲𝗱𝘂𝗰𝘁𝗶𝗯𝗶𝗹𝗶𝘁𝘆
✅ From 𝟭 𝗔𝗽𝗿𝗶𝗹 𝟮𝟬𝟮𝟰, you can claim 𝟴𝟬% 𝗼𝗳 𝘁𝗵𝗲 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 incurred on funds borrowed for residential property, regardless of when the property was acquired or when the loan was drawn.


𝟮. 𝗙𝘂𝗹𝗹 𝗗𝗲𝗱𝘂𝗰𝘁𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗶𝗻 𝟮𝟬𝟮𝟱
✅ Starting 𝟭 𝗔𝗽𝗿𝗶𝗹 𝟮𝟬𝟮𝟱, interest deductibility will be fully restored, allowing you to claim 𝟭𝟬𝟬% 𝗼𝗳 𝘁𝗵𝗲 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 incurred.


𝟯. 𝗪𝗵𝗮𝘁 𝗦𝘁𝗮𝘆𝘀 𝘁𝗵𝗲 𝗦𝗮𝗺𝗲
Until full interest deductions are restored, the following rules remain unchanged:
✅ Property types the rules apply to
✅ How the rules work for different entities
✅ Exemptions for land businesses, property development, and new builds


𝟰. 𝗗𝗶𝘀𝗮𝗹𝗹𝗼𝘄𝗲𝗱 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗕𝗲𝘁𝘄𝗲𝗲𝗻 𝟮𝟬𝟮𝟭-𝟮𝟬𝟮𝟰
✅ Any interest deductions that were previously disallowed between 𝟭 𝗢𝗰𝘁𝗼𝗯𝗲𝗿 𝟮𝟬𝟮𝟭 𝗮𝗻𝗱 𝟯𝟭 𝗠𝗮𝗿𝗰𝗵 𝟮𝟬𝟮𝟰 will remain disallowed, unless the property is sold and subject to tax.


𝟱. 𝗪𝗵𝗲𝗻 𝗬𝗼𝘂 𝗦𝗲𝗹𝗹 𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝘆
✅ If your property is taxable under the bright-line property rule or other land sale rules, previously disallowed interest can be included as part of the property’s cost in the year of sale.


𝟲. 𝗖𝗵𝗲𝗰𝗸 𝗶𝗳 𝘁𝗵𝗲 𝗥𝘂𝗹𝗲𝘀 𝗔𝗽𝗽𝗹𝘆 𝘁𝗼 𝗬𝗼𝘂
✅ Use this tool to see if you’re exempt or excluded from the interest limitation rules:
https://lnkd.in/dtxxYcDa
(𝘚𝘤𝘳𝘰𝘭𝘭 𝘥𝘰𝘸𝘯 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘤𝘢𝘭𝘤𝘶𝘭𝘢𝘵𝘰𝘳)
✅ If you’re unsure, it’s best to consult a tax professional.


💼 𝗜 𝗵𝗲𝗹𝗽 𝗞𝗶𝘄𝗶 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝗼𝘄𝗻𝗲𝗿𝘀 𝘀𝗮𝘃𝗲 𝘁𝗵𝗼𝘂𝘀𝗮𝗻𝗱𝘀 𝗶𝗻 𝘁𝗮𝘅𝗲𝘀 𝗯𝘆 𝗽𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗻𝗴 𝘁𝗵𝗲𝗺 𝗳𝗿𝗼𝗺 𝗰𝗼𝘀𝘁𝗹𝘆 𝗲𝗿𝗿𝗼𝗿𝘀.

📘 𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗺𝘆 𝗳𝗿𝗲𝗲 𝗯𝗼𝗼𝗸: 10 Big Property Tax Mistakes That Cost Thousands
https://lnkd.in/g_W7WNQK

🔔 𝗙𝗼𝗹𝗹𝗼𝘄 𝗺𝗲 𝗳𝗼𝗿 𝗺𝗼𝗿𝗲 𝘁𝗮𝘅 𝘁𝗶𝗽𝘀 𝗮𝗻𝗱 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀.

✉️ 𝗝𝗼𝗶𝗻 𝗺𝘆 𝗺𝗮𝗶𝗹𝗶𝗻𝗴 𝗹𝗶𝘀𝘁 for exclusive content and tax tips:
https://lnkd.in/gEjUQKMp

🎥 𝗪𝗮𝘁𝗰𝗵 𝗺𝘆 𝘃𝗶𝗱𝗲𝗼 for a chapter summary from my book.