NEWS

Chris Luxon has taken over and he isn’t hanging around. Getting straight to the point, it's good news for residential landlords and people that are impacted by the bright line scheme. 

 

Brightline Changes 

The National party are proposing they decrease the bright line period as of 1 July 2024 from 10 years to 2 years. Under the coalition, NZ First has no policy around the scheme, however, they are against any further capital gains tax. On the other side, David Seymour is trying to abolish the bright line scheme altogether. This is to be confirmed in the coming months with the exact changes and specific dates. 

If the bright line scheme is decreased to 2 years it will promote more investors to purchase, renovate, and sell residential properties. This is due to them only having to hold the property for 2 years before they can sell the property and therefore the profit made is tax free. Therefore, promoting economic activity, aiding the economy in recovery from the recession that has occurred in the past year.

 

Residential Interest Deductibility 

Enabling the deduction of interest on residential properties means that as a landlord you are able to include ‘interest on loan’ expense in your taxable profit and loss statement. Thus, decreasing your taxable income, reducing the tax you are required to pay.

Currently National and ACT have agreed on imposing the policy quicker. The current proposal is that “grandparent loans” (loans started before 27 March 2021) and new loans with deductions of; 

• 80% of interest costs from 1 April 2024
• 100% of interest costs from 1 April 2025 onwards

 

Residential interest deductibility is a considerable incentive for landlords to purchase properties for rental purposes. This increases the number of landlords and consequently the number of rentals, therefore, increasing the option which tenants have when choosing a property to rent.

 

It is important to keep educated with what is happening politically and how it affects you and your business directly and indirectly. In the next coming months after the policies are confirmed with specific dates, we can provide certainty and plan for the future. Giving you the foundation to best accommodate and maximise the policies to your advantage helping you provide for yourself and your family.

 

This information is intended to provide general advice only. We recommend you discuss your specific situation with your Accountant.