New Build Exemption.

Our understanding is that the intention is for new builds to be exempt entirely which means there wouldn’t be any exclusion of the interest costs. As evidenced through press conferences with the relevant ministers.
However, no official document can say this 100% set in stone, because the policy is not law and it has to go through the three stages of parliament first. That being said, we are extremely confident that this will be the case.
That is why you see indefinite statements in the media and throughout official press releases.
The consultation process is:
1st the bill will be drafted and potentially circulated to industry
It will have it’s first reading / debate in parliament
The bill will then go through to select committee. Anyone in NZ can make a written submission on the bill, and then some people will have the opportunity to give an oral submission. This process takes 6 weeks.
At the end of the select committee process the committee will recommend changes to the bill
This will then be either adopted or rejected and the bill will go back for a second reading / debate in the house
There will be final reviews and changes based on the bill fitting with other legislations before going through to a 3rd and final debate.
This process takes time, which is why the government has signalled that interest deductions can still be made until October 1st. This deadline may be extended.

shorebee - 2021-03-30 13:40:00

Even when this is eventually answered - the elephant in the room is - How definitive are Labour on this? Who trusts liars when it comes to investing large amounts?

pcle - 2021-03-30 14:02:00

Who trusts that they won’t say once it’s a year or two old, it’s no longer new therefore you can no longer deduct the interest? I would put money on them deciding to find another way of kicking property investors

rowlf - 2021-03-30 14:34:00

Cindy said on TV they would clarify by October. Hope your not planning on buying a new build.

fxx99 - 2021-03-30 14:51:00

One of the up sides of the new / proposed rules etc is it generates some employment opportunity... Lawyers, accountants and similar sort of people will hang up their shingle as "consultants" who will for a fee help arrange your affairs so that some or all of the new rules do not affect you.
If you just looks at the interest tax deduction matter, in some cases, this equates to quite big amounts..
I did a very rough calculation, as follows: If say currently you pay $100 interest per week on a loan for your rental... then you have to collect $100 in rent to cover this.... under the new rules you will have to collect $150 in rent, pay tax on that, and then give the remaining $100 to the bank. (This assume a tax rate of 33%). Now the LL out of the kindness of his / her heart is not going to just wear some or all of this extra $50, so the tenant is going to have to chip in !!

onl_148 - 2021-03-30 16:04:00

Well duh. Add a huge new tax onto rent and guess what happens? Rents go up. Extra good if the new build exception actually happens.

pcle - 2021-03-30 17:10:00

Of course rents go up - i mean they still went up when interest rates halved 5 times since 2009 ...

funkydunky - 2021-03-30 17:35:00