With todays announcement from the Minister of Finance, the government has announced significant proposed changes for residential property acquired on or after 27 March 2021. We wanted to provide this urgent InfoBase update to help you navigate through these changes and understand what they might mean for you.
The proposed changes and guidance (follow the links) from IRD include:
- Extending the bright-line test to 10 years
- Amending the main home exclusion which would require tax to be paid on gains made for periods the property is not used as the owner’s main home
- Allowing newly built homes to use a 5 year bright-line test
- Not allowing property owners to claim interest on loans used for residential properties as an expense against their income from those properties. This would start from 1 October 2021, and would also be phased in over 4 years for existing properties. There would be an exemption for newly built homes.
We will continue to provide updates on this as they come to hand, if you have any further questions please get in touch with your accountant.
We hope this update is useful for you and helps to provide some clarity. We will review and update all of our other rental property articles in the InfoBase over the coming weeks to reflect these changes.
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