Have your say: Should landlords get to claim mortgage interest costs?

Wednesday, 13 March 2024

Property investors are regaining the ability to claim interest costs. Is it the right move? Let us know in the comments.

The Government is reversing a Labour policy that was phasing out the ability of property investors to claim home loan interest as an expense.

Associate Finance Minister David Seymour said on Sunday that investors would be able to claim 80% of their interest expenses as a cost for tax purposes from April 1 this year, and 100% from April 1 next year. The change is due to cost the Government $2.9b in tax revenue over the next four years.

Both Seymour and Prime Minister Christopher Luxon have argued the ability for investors to claim interest expenses will simplify the tax system, as other businesses are able to deduct their costs, and will ease pressure on rents.

“Landlords have been hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations during a cost of living crisis,” Seymour said on Sunday.

“These costs are inevitably passed on to tenants, one of the reasons New Zealand has all time high rental costs.”

Opposition MPs have said there’s little evidence to show investors’ savings will be passed on to tenants, and that first home buyers will now be at more of a disadvantage when bidding against investors for properties.

“There is nothing in [Sunday’s] announcement that guarantees tenants will have savings passed on to them,” Labour’s finance spokesperson Barbara Edmonds said in a statement.

“This tax advantage for the wealthy is not only set to be unfair for tenants, it shuts first home buyers out from getting a foot on the property ladder.”

Is the Government making the right move? Let us know in the comments.