How the 2026 election could affect your rentals, bach and home
ELECTION 2026 · PROPERTY & TAX
How the 2026 election could affect your rentals, bach and home
New Zealand goes to the polls on 7 November 2026, and for anyone who owns property, tax is on the ballot. Labour, Te Pāti Māori, the Greens and The Opportunities Party each propose new taxes that would reach rentals, second homes and — in some cases — the family home and the bach that has been in your family for generations. The last time a Labour-led government changed the rules, ordinary Mum-and-Dad investors were left paying tax on rental properties that were losing money, and many were forced to sell. This article shows, with real figures, how the proposals on the table could affect you — and how the annual taxes might be met without selling the assets you most want to keep.
Key points
• New Zealanders vote on 7 November 2026, and property tax is squarely on the ballot.
• Chris Hipkins guarantees a capital gains tax will be Labor’s only new tax from 1 July 2027. But he will not confirm whether Labour would remove or reduce interest deductibility for landlords again.
• Te Pāti Māori, the Greens and TOP each propose wealth, land or inheritance taxes — some payable every year, whether or not the asset earns a cent.
• When deductibility was last removed, Mum-and-Dad investors were taxed on loss-making rentals and sold — and new rental buyers were effectively shut out.
What’s happened so far
Interest deductibility, the ability to deduct mortgage interest as a cost against rental income, has become one of the most politically contested aspects of New Zealand tax. In 2021 the then Labour Government began phasing it out for residential rentals, arguing the tax treatment was fuelling property speculation; interest on properties bought after 27 March 2021 stopped being deductible, and deductions on older properties were progressively reduced. (Inland Revenue was notably unconvinced, warning at the time that extra taxes on rental housing were unlikely to improve affordability and might push rents up.)
The current National-led coalition, with ACT and New Zealand First, reversed that, restoring full 100% deductibility from 1 April 2025, at a cost of roughly $2.9 billion over four years. So, as things stand today, landlords can deduct all of their mortgage interest again. The open question is whether that will survive a change of government.
What Labour has actually said
More than before, but with one conspicuous gap. In late August 2026, Chris Hipkins was asked directly whether he could guarantee that Labour would introduce a capital gains tax and no other taxes. He said yes. That capital gains tax, a flat 28% on gains from the sale of residential and commercial property, with the family home and farms excluded, is proposed to apply from 1 July 2027, with the revenue funding three free GP visits a year. Chris Hipkins has made it his bottom line, and has been equally firm that Labour would not adopt the taxes its potential partners are campaigning on.
But here is the gap. Chris Hipkins will not say whether Labour would restore the restrictions on interest deductibility it imposed on landlords in 2021, a change that would increase the tax those landlords pay. He has said the party’s position will be set out in its fiscal plan and, as at lofe August, he had still not confirmed it. Earlier he suggested a full removal was “unlikely”, while leaving the door open to a partial version, for example, allowing only half of the interest to be deducted. In short, the one number that matters most to a geared landlord is precisely the one Labour has kept back.
The other parties, and why “no new tax” can still mean more tax
Labour is unlikely to govern alone. On current polling it would need partners, and each of the most likely has put tax at the centre of its campaign. For a property investor, their plans matter as much as Labour’s, because coalition governments are built by negotiation.
Te Pāti Māori. Its “Kiwi Tax Plan”, released in late August 2026, proposes a new 5% stamp duty on residential property purchases (paid by the buyer, with an exemption for first-home buyers under $1 million); a 33% land-banking tax and a tax on long-term vacant homes; a tiered wealth tax rising from 1.5% on net wealth above $2 million to 2.5% above $10 million — with, notably, no family-home exemption; and the company tax rate lifted from 28% back to 33%.
The Greens. Their 2026 policy, “A tax system for all of us”, would introduce a 2.5% annual wealth tax on net assets above $10 million (family home exempt) and a 33% tax on inheritances and gifts above $1 million (family home and farms exempt). Critically for landlords, the Greens would once again deny interest deductibility on rentals and restore the 10-year bright-line test, while cutting income tax for most earners.
The Opportunities Party (TOP). Polling near the 5% threshold and a possible kingmaker, TOP proposes a land value tax — 1.75% on urban land and 0.5% on rural land, charged on the land value rather than the buildings — to fund a tax-free “citizen’s income” of $19,400 a year. For anyone who owns land, including landlords, that is a significant new annual cost, whatever the party calls it.
Notice the pattern. The Greens present their reversal of interest deductibility alongside an income-tax cut; TOP presents its land tax as part of a “tax reset” that leaves most people better off; Labour insists a capital gains tax is its only “new tax”. Yet each of these can raise the tax an investor pays. The label, “tax cut”, “tax reset”, “no new tax”, is not the same as the effect on your bottom line.
Chris Hipkins insists Labour will implement only its own capital gains tax, and that is a genuine commitment. But Te Pāti Māori has called transforming the tax system a bottom line of its own, and the Greens’ and TOP’s policies show how much further a coalition partner might push. National, for its part, has branded the combined agenda the biggest tax grab in the country’s history. Whatever your politics, the sensible planning assumption is that a change of government carries more uncertainty for property investors than any single party’s manifesto suggests.
The one thing most people get wrong
Here is the trap. When investors hear Chris Hipkins guarantee that a capital gains tax is Labour’s only “new tax”, many relax, and that is exactly the mistake. Removing or reducing interest deductibility would not be a new tax at all; in Labour’s own language it would be reversing a “tax cut”. That is precisely why it can sit outside the “only a capital gains tax” promise while still substantially lifting a landlord’s annual tax bill.
So, the change most likely to hurt a highly geared investor is not the headline capital gains tax, which bites only when you sell, but the deductibility question Labour has declined to answer, which bites every year you hold. Planning around the capital gains proposal alone, and assuming deductibility is safe, could be a mistake.
A real-life impact: how the last change forced Mum-and-Dad investors to sell
It has happened before, and the numbers show why. When the last Labour Government began removing interest deductibility on residential rentals from 2021, it did not change what landlords earned; it changed what they were taxed on. Interest, usually a landlord’s single biggest cost, was progressively disallowed. For a geared investor, the result was tax on a property that was losing money.
Take Graeme and Sue (not their real names), both in their late fifties, who bought a rental property in 2015 for $600,000 to help fund their retirement, years before anyone had heard of the change in deductibility. They borrowed $450,000 interest-only. It was a sensible, ordinary plan: hold the property, pay down the loan, and draw on it in retirement. By 2023, with mortgage rates having climbed to about 6.5%, the interest ran to roughly $29,250 a year; the rent brought in about $32,240; and rates, insurance, maintenance and management cost about $7,500, a cash shortfall of about $4,510 a year that they topped up from their wages.
Then the rules they had relied on when they bought were taken away from under them. As interest deductibility was phased down to 75% and then 50%, a growing share of their mortgage interest could no longer be deducted, even as interest rates were rising. In the 2023-24 year, with only half the interest deductible, they were taxed on a “profit” of about $10,100 and paid roughly $3,300 in tax, on a property that was, in cash terms, losing money. Under Labour’s original timetable, the deduction was heading for zero, at which point the tax on that same property would have been about $8,200 a year. National reversed the change, and full deductibility is back today, but Labour will not rule out returning to it, and the Greens would expressly.
For a couple on a fixed pre-retirement budget, paying thousands in tax on an asset that was already losing money was the final straw. Like thousands of small landlords over 2021–2024, squeezed at the same time by rising interest rates, Graeme and Sue sold the very asset they had bought to provide for their retirement, into a soft market. And the change did more than push existing investors out. Because any rental bought after 27 March 2021 got no interest deduction at all, a geared purchase for retirement was uneconomic from day one, effectively shutting ordinary Mum-and-Dad New Zealanders out of buying a rental to build retirement income in the first place. The figures here are illustrative, but the pattern was common, and it is the clearest warning of what a return to those rules would mean.
When would these taxes be payable, and what is exempt?
A capital gains tax, like Labour’s, bites only when you sell. The land and wealth taxes are different in a way that matters enormously: they fall due every year, on what an asset is worth, whether it earns a cent. But the detail, when each would start, and what each carves out, varies markedly between the parties. Here is where each stands with links to the policies themselves.
The Opportunities Party - a land value tax. An annual tax on the unimproved value of land (not the buildings): 1.75% on urban land and 0.5% on rural land. It would be phased in over a full decade, with the first elements introduced only after two years of planning, and the land tax starting at 0.5% on urban land and reaching the full 1.75% by about year six. Exemptions apply to communally owned Māori land, conservation land, land owned by clubs, societies and non-commercial religious organisations, government land, Treaty settlement land, and social housing, but not the family home or the bach. Crucially, superannuitants may defer the entire land tax until the property is sold, so it is paid, with the accrued amount, out of their estate; farmers get the lower rate and a more limited deferral. (opportunity.org.nz/tax-reset)
The Greens - a wealth tax and an inheritance tax. A 2.5% annual wealth tax on net assets above $10 million for an individual (or $20 million for a couple), taking in property, shares and business assets, but with the family home exempt. Alongside it, a 33% “capital acquisitions” tax on inheritances and gifts you receive above $1 million over your lifetime, with the family home, family farms and transfers of Māori land under Te Ture Whenua exempt. The party’s costings run from the 2027/28 year. The Greens would also reverse the restoration of landlord interest deductibility and return the bright-line test to ten years. (greens.org.nz/tax_system_for_all)
Te Pāti Māori - a wealth tax and a stamp duty. A tiered annual wealth tax - 1.5% on net wealth above $2 million, 2% above $5 million and 2.5% above $10 million - with, unlike the Greens, no family-home exemption, so the home counts once total net wealth crosses $2 million. Plus a 5% stamp duty on residential sales: a one-off cost on the transaction, generally paid by the buyer, with first-home buyers under $1 million exempt but the family home otherwise included. No start date has been set; it would be a matter for coalition negotiation. (Te Pāti Māori’s Kiwi Tax Plan)
Notice what the exemptions do, and do not, protect. Only the Greens carve out the family home, and even then, only the family home, not the bach or a second property. TOP’s land tax reaches the family home, and the bach alike (though superannuitants can defer it), and Te Pāti Māori’s wealth tax has no family-home exemption at all. For the assets many families most want to keep, the safeguards are thinner than the headlines suggest.
Two worked examples show what that can mean. Take the Whitcombe family (not their real name): their Coromandel bach, bought by the grandparents in the 1970s and now shared by three siblings, sits on land worth about $1.6 million. Once TOP’s land tax reached its full 1.75%, that would be roughly $28,000 a year, and because a bach is not a family home, none of the parties exempts it. If the siblings are of working age, TOP’s deferral (which is for superannuitants) would not be available, so the bill would fall due each year in cash; and if the family’s total wealth is high enough, the bach’s value would also count towards a wealth tax on top.
Now take a retired couple living mortgage-free in an Auckland home on land worth $1.4 million. Under TOP’s land tax the land would, at the full rate, attract about $24,500 a year, but as superannuitants they could defer the whole amount until the house is sold, so there would be no annual cash bill. Instead, the deferred tax, plus interest, accrues as a charge against the home and is paid out of their estate, quietly reducing what passes to their children. Under the Greens’ wealth tax their family home would be exempt; under Te Pāti Māori’s there is no family-home exemption, though it would bite only if their total net wealth exceeded $2 million. Same house, three very different answers, which is exactly why the detail matters.
Paying an annual tax without selling the bach or the home
So how would a family meet a yearly, value-based tax on an asset that produces no income, without selling something they want to keep? There are a handful of routes, and none is free:
• Deferral, where it is offered TOP - would let superannuitants defer the land tax entirely until the property is sold, and offers farmers a more limited deferral. But a deferral is not forgiveness: the unpaid tax accrues interest and serves as a charge against the property, to be repaid on sale or death. Left to run for years, it quietly eats the value of the asset, and your children’s inheritance. The wealth taxes, by contrast, do not come with a general deferral, so they must be found in cash each year.
• Borrowing against the asset - drawing on the property’s equity, reverse-mortgage style, to fund each year’s bill. It keeps the asset in the family for now, but the debt compounds against it.
• Earning income from it - letting a bach commercially for part of the year to raise the cash to pay the tax. That can work, but it brings its own GST and income-tax consequences, see our article on holiday homes and GST.
• Restructuring and a funding plan - reviewing how the asset is owned and building a deliberate plan to carry the liability across a generation, co-ownership agreements, a sinking fund, or life insurance to clear an accrued deferral on death, so the asset passes to the next generation intact.
The truth is that an annual tax on an income-less asset will, for some families, end in a sale, no structure prevents that. What planning ahead does is turn a forced sale into a deliberate choice: knowing the cost, deciding together how it would be funded, and making sure that whatever the family keeps passes on cleanly.
What can a sensible owner actually do now?
Start with what does not work. You cannot restructure your way out of a land value tax or a broad wealth tax. A land tax is charged on the land whoever owns it; a wealth tax reaches assets held in a trust or a company just as much as assets in your own name. Anyone who tells you a clever ownership structure makes these taxes disappear is mistaken. What you can do is make deliberate, well-informed decisions, and plan for the costs you cannot avoid:
• Know your numbers. Ask your accountant to model, for each realistic outcome, a capital gains tax, a return to non-deductibility, a land or wealth tax, what it would actually cost you. You cannot plan around a figure you have not worked out.
• Decide, deliberately, what still fits. For each property the real question is whether it still belongs in your plan under the new rules: hold, sell, or consolidate. If you decide to act, time it to the actual result and the detail, not to a campaign promise.
• Use the reliefs that genuinely exist. The few real ones are worth getting right, which property counts as your family home (exempt from the Greens’ wealth tax, and from a capital gains tax), and whether a superannuitant can defer a land tax. These turn on facts and paperwork, not on clever structures.
• Plan how an unavoidable cost, or a deferral, is funded and passed on. This is the real work: a co-ownership or property-sharing agreement setting out who pays the annual bill on a shared bach; a will and estate plan that accounts for a deferral accruing against a home; life insurance to clear that charge on death so the asset passes intact; a deliberate family conversation about who carries the cost.
• Don’t do anything irreversible on a campaign promise. Policies change, and coalitions negotiate. Selling or restructuring in a panic before polling day can cost more than the tax ever would.
Where we can help is not in making a tax disappear, no one can do that. It is in the legal architecture around the assets you want to keep: co-ownership and property-sharing agreements, wills and estate plans that account for a new annual cost or an accruing deferral, and family arrangements that decide, in advance, how a treasured home or bach is funded and handed on. We do that work alongside your accountant and tax adviser.
Questions clients ask us
If Labour promises “only a capital gains tax”, can my interest deductibility still change?
Yes. Reversing the current deductibility rules would, in Labour’s framing, undo a “tax cut” rather than create a “new tax”, so it can happen without breaking that promise. The Greens have said openly they would deny deductibility again.
I only own one rental. Do these policies really affect me?
They can. Losing interest deductibility raises your tax every year; a stamp duty or land tax would add cost on purchase or annually; and a capital gains tax would apply when you sell. The impact depends on your gearing, your plans, and which parties form the next government.
Should I sell, or restructure, before the election?
Not on the strength of campaign promises alone. Restructuring has its own costs and tax consequences, and policies change. The better course is to model the scenarios with your adviser and be ready to act once the results and details are known.
Would a wealth tax or a land tax apply to my family trust?
It could, and a trust does not shield you. The wealth taxes proposed by Te Pāti Māori and the Greens, and TOP’s land tax, reach assets held in trusts and companies just as they reach assets in your own name. A trust is still worth keeping current for estate and succession reasons, but it is not a way around these taxes.
We own a bach that’s been in the family for generations. Could we be taxed on it every year?
Potentially, yes. TOP’s land tax would apply to its land value every year, and, because a bach is not your family home, its value could also count towards Te Pāti Māori’s or the Greens’ wealth tax. TOP’s deferral is for superannuitants, so for working-age owners the land-tax bill would fall due in cash each year. Planning how to fund or restructure the holding in advance is often the difference between keeping the bach and having to sell it.
Where to get information and support
• Labour’s stated priorities: labour.org.nz.
• The Opportunities Party’s “Tax Reset” (land value tax, deferrals and exemptions): opportunity.org.nz/tax-reset.
• The Greens’ 2026 tax policy, “A tax system for all of us”: greens.org.nz.
• Te Pāti Māori’s “Kiwi Tax Plan” (RNZ coverage): rnz.co.nz.
• Inland Revenue on interest deductibility for residential rental property: ird.govt.nz.
• Your own accountant or tax adviser, for figures specific to your portfolio.
One change to watch
Watch two things as 7 November nears. First, Labour’s fiscal plan, whether it finally spells out the party’s intentions on interest deductibility, and whether any change would be full or partial. Second, the coalition arithmetic: the further Labour is from governing alone, the more a partner such as Te Pāti Māori, the Greens or TOP could shape the final tax package. We will keep an eye on both.
None of these taxes can be structured away. But you can decide, with clear numbers, what to keep, and plan how to fund it and hand it on. RHL helps with co-ownership agreements, wills, and estate planning for the assets you want to keep in the family for the long term, working alongside your tax adviser. Get in touch.
This article is general information only and is not legal, tax or financial advice. It describes the parties’ publicly stated positions as at August 2026, which may change before or after polling day. Your situation is unique; please obtain specific legal and tax advice before acting.
About the author. Ross Holmes is the Managing Director of Ross Holmes Virtual Lawyers Limited and a contributing author to the LexisNexis Law of Trusts (New Zealand). The firm advises on property and conveyancing, estate planning (trusts and wills), personal law, business law, seniors law and estates, entirely online, from Auckland and Rotorua. rossholmeslawyers.com · Contact us
