The Government has confirmed landlords are once again able to deduct interest costs on their residential investment properties against rental income.
From 1 April 2024 landlords are able to claim 80% of their interest expense which increases to 100% from 1 April 2025. Although, as part of the coalition agreement with ACT, the government said it would backdate the tax deductions so that 60% of interest from residential rental income could be claimed for for 2023/2024 year, this has not been approved and will not go ahead.
National also confirmed in December 2023 that the brightline period for residential investment properties will be reduced to two years, currently 10 years (or five years if the property is a ‘new build’), from 1 July 2024. As a result, properties acquired before July 2022 should not be subject to the brightline test on sale.