The Coalition Government has decided to phase in interest deductibility for landlords more slowly than promised in the National–Act coalition agreement.
Act Party leader David Seymour and Revenue Minister Simon Watts announced interest deductibility for rental properties would be phased in from the start of April 2024.
This is a change from the coalition agreement which promised to begin the phase in with a 60% reduction in the 2023/2024 financial year, followed by 80% and 100% in the years after.
That would’ve allowed most landlords to claim the tax break retrospectively, back to April 2023, and the Government may have had to issue refunds — an unconventional move.
Instead, the coalition has agreed to wait for the 80% phase on April 1 this year, avoiding the headache and expense of backdating the policy.
The press release issued by Seymour on Sunday afternoon did not acknowledge the policy had been changed from the coalition agreement.
“Help is on the way for landlords and renters alike. The Government’s restoration of interest deductibility will ease pressure on rents and simplify the tax code,” it said.
“Landlords have been hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations during a cost-of-living crisis. These costs are inevitably passed on to tenants, one of the reasons New Zealand has all time high rental costs”.
However, in a press conference Seymour was asked about the change in policy.
The Act Party leader said bringing in the 60% mortgage interest deductibility for the current tax year was not worth the work required.
“To have gone to 60% retroactively would have complications probably not worth the amount of benefit it would have given,” he said.
It was still the best policy for New Zealand and phased mortgage deductibility back in faster than any other party would’ve done without the Act Party in Government, Seymour said.
Watts incorrectly said the policy was being delivered as promised in the agreement.
“What we are delivering today is what we promised and articulated in our coalition agreement and Kiwis should be pleased that another thing has been ticked off”.
The substantial part of the policy is happening as promised in the agreement but with a meaningful change to when it begins to take effect.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.