What were the Interest Limitation Rules?
From 1 October 2021 to 31 March 2025, the interest limitation rules restricted the ability to deduct interest costs on residential investment properties unless an exclusion or exemption applied. The rules applied only to property in New Zealand.
What Happens to Interest Payments Between October 2021 and March 2024?
Interest deductions that were previously disallowed between 1 October 2021 and 31 March 2024 are not recoverable unless the property is sold and subject to tax.
Can You Claim Interest Deductions on Your Rental Property?
In most cases, yes — but from 1 April 2025 onward. In the meantime, 80% is still deductible for the current tax year.
We recommend speaking with your accountant or the Inland Revenue Department (IRD) for specific guidance. Tax rules change regularly, and what applies to one investor may not apply to another.
What Property Investors Should Do Now
- Review your interest expenses for the 2024–25 year
- Get professional tax advice
- Reassess your long-term investment strategy now that deductibility will return
If you're working with a property manager, make sure they can provide clear reporting to help with end-of-year tax prep.
