The latest tweaks to New Zealand's 2024 Tax Reforms

This week, the government is working on passing new tax laws that were promised by the coalition government and fixing some long-standing issues with the current tax system, according to Finance Minister Nicola Willis.

These new tax rules are contained in an Amendment Paper to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill issued on 14 March 2024. For full details click here: https://www.taxpolicy.ird.govt.nz/news/2024/2024-ap-multinational-tax-bill. 

The Bright-Line Test

One of the key changes is related to the Bright-Line Test, as explained by Revenue Minister Simon Watts. 

Currently, if you sell a property that you've bought as an investment within 10 years for an existing property or within 5 years for a new build, you have to pay tax on any profit you make. 

The new proposal is to shorten this period to just two years starting from July 1, 2024. This means if you sell your residential investment property within two years of buying it, any profit you make will be taxed.

The Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill will be passed before the tax year ends on March 31 2024.

Interest Deductibility
Another major update is about deducting interest expenses for residential investment properties. 

Starting from 1 April  2024, property owners can start claiming 80% of their interest expenses as deductions against their income. From 1 April 1 2025, they can claim 100%. 

This change is for everyone, no matter when you bought your property or took out a loan. 

Please note that the information presented in this blog is intended for general informational purposes only and should not be construed as legal advice on any matter.

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