Welcome to the exciting debut of our blog series, where we embark on a captivating journey through the ever-evolving realm of property investment and management.

With the arrival of any new government comes new legislation, and there’s been no shortage of press around the property investment market and residential tenancy changes proposed by our new Government. So brace yourselves, as significant shifts in rental property taxation and regulations are on the horizon, promising a transformative odyssey for both tenants and landlords.

In this series, we’ll unravel the intricacies of these changes and offer invaluable insights into what lies ahead for property management, particularly in the North Shore and Rodney areas.

Let’s begin with a spotlight on the restoration of interest deductibility on rental properties—a topic that has been hotly debated and drawn much criticism and praise across the political spectrum. While the exact details of the plan have not yet been confirmed, the coalition agreement signed between Act and National outlines that the rollback of interest deductibility will happen faster than National’s original proposal.

Instead of the current rules allowing 50% of interest costs to be claimed, it has been indicated that soon you’ll be able to claim 80%, possibly as early as April 1st, 2024. This will be followed shortly afterward by full interest deductibility, planned to be restored by April 2025.

But what does this mean for you in practical terms? It signifies a game-changing opportunity for landlords to reclaim their financial foothold by offsetting interest expenses against their taxable rental income. In simple terms, it means you can pay less tax and end up with more cash in your pocket!

With interest rates on the rise, many investors have found their cash flow strangled through higher tax bills. The Government’s proposal is a beacon of hope aiming to dismantle these constraints and breathe new life into property investment, thereby revitalising the rental market.

With this imminent change, a stagnant housing market, and high net migration, now is a great time to seriously consider purchasing an investment property. Experts are forecasting a continued rise in rent prices, meaning that hot spots like the North Shore and wider Rodney area can generate healthy rental returns on residential property investment.

Another crucial consideration is that you could be eligible for 100% of your interest costs to be claimed right now. Current legislation indicates that houses that received their Code of Compliance Certificate (CCC) on or after March 27th, 2020, are exempt from restrictions on interest deductibility for 20 years. This exemption/benefit applies to all owners of that house within 20 years. So targeting a new build—or any home where the CCC was issued on or after March 27th, 2020—means you have 100% interest deductibility from the day you take ownership.

If purchasing an investment property is something you’re interested in, we recommend seeking counsel from financial experts to maximise the benefits of interest deductibility.

If you’re looking for an investment property, we would be more than happy to assist by providing a free rental appraisal of prospective properties to help you with your planning. Simply reach out to us at hello@vertigro.co.nz.

Lastly, make sure you stay glued to our blog series as we delve deeper into the labyrinth of rental property regulations, uncovering hidden gems and navigating potential pitfalls along the way. Together, let’s chart a course toward a rental market that’s equitable, transparent, and thriving for all.