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Inland Revenue

Tax Policy

Taxation of residential investment property

As at 31 March 2022 (see the page history for details of changes)



In March 2021 the Government announced several changes to the taxation of residential investment property including:

  • extending the bright-line test for residential properties from five to ten years (this change became law in March 2021), and
  • limiting interest deductions on residential investment properties (the design of the rules were consulted on).

In September 2021 the Government released draft legislative proposals aimed at limiting interest deductions for residential investment properties. These proposals will be considered by Parliament and may change.

In summary, residential investment properties capable of being used for long term accommodation would be subject to the proposed rules. However, the following exclusions and exemptions are proposed:

  • an exclusion for the main family home
  • exclusions for several types of residential property, and
  • exemptions for new builds and for property development.

The following information sheets provide general information about how the proposed rules are intended to work:

  1. Interest deductibility proposals at a glance
  2. Properties not affected by the interest deductibility proposals
  3. How the rules work for certain entities
  4. Exemptions for property development and new builds
  5. How interest deductions are affected
  6. Changes to the bright-line property rule

For detailed information see:

More information

Tax policy announcements and publications.

Related announcements

Related publications

Page history:

  • Last updated: 31 March 2022
  • Changes made:
    • 8 March 2022 – Bill reported back to Parliament by the Finance and Expenditure Committee on 3 March 2022
    • 12 October 2021 – a commentary on the SOP was released
    • 11 October 2021 – minor updates to the overview section
    • 1 October 2021 – added status update (submissions can now be made to Parliament's Finance and Expenditure Select Committee), improved overview
    • 28 September 2021 – Initial page published
    • 31 March 2022 – added news items from 30 and 31 March 2022, added link to special report and the Act