Interest deductibility (New Zealand residential rentals)
New Zealand tax rules governing whether interest on loans for residential rental property is deductible against rental income. Restrictions introduced in 2021 have since been progressively reversed.
Interest deductibility determines whether New Zealand residential rental owners can claim the interest component of their mortgage as an expense. The rules introduced from 1 October 2021 phased out deductions for interest on existing residential rental loans, with limited exceptions for new builds.
Legislation passed in 2024 reinstates interest deductibility in stages: 80% of interest is deductible for the 2024–25 income year and 100% from 1 April 2025 onwards. The rules apply differently to properties acquired before and after the relevant commencement dates.
Because the historical treatment affects unused deductions carried forward, owners should read IRD’s guidance directly rather than relying on older commentary.
Primary source
Inland Revenue (IRD) — Interest deductions on residential property →Last reviewed 15 April 2026. Rates, thresholds, and deadlines change — always verify against the primary source before making decisions.