The landscape of property rental in New Zealand is on the verge of a substantial transformation with proposed changes in property tax and tenancy laws. Spearheaded by the National-ACT-NZ First coalition, these adjustments are poised to leave a lasting impact on both landlords and tenants alike. Here's a comprehensive breakdown of the impending alterations:
- DEDUCTIBILITY OF MORTGAGE INTEREST FOR LANDLORDS
Effective April 1, 2024, landlords will be entitled to claim 80% of thei nterest paid on their mortgage as a business expense for their rental properties. This percentage is set to increase to 100% from April 1, 2025.
- NOTICE PERIODS
Under the new legislation, the notice periods for terminating tenancies will undergo modifications. Tenants will now be required to provide a 21-day notice, whereas landlords will need to give a 42-day notice. This marks a reduction from the previous 28-day notice period for tenants and 63-day notice period for landlords in certain situations.
- PET BONDS
The new laws will empower property owners to request more than the standard four weeks' bond money to cover potential damages from pets.
- REINSTATING 90-DAY NO-CAUSE EVICTIONS
The government is reintroducing "no-cause eviction," allowing landlords to terminate tenancies without providing a reason as long as they give a 90-day notice.
- BRIGHT-LINE TEST
The bright-line test, determining tax liabilities on property sales within a specified period, is set for an adjustment. Currently applicable to properties bought after March 27, 2021, and sold within five or ten years, the bright-line period will be reduced to two years for properties sold after July 1, 2024. Pending confirmation details include whether trust transfers trigger the bright-line rules, the calculation start date of the bright-line period, and the exemption for the 'main home.'
These proposed changes carry significant implications for tenancy, tax laws, and property investment in New Zealand. As such, individuals involved in these sectors are strongly advised to seek legal and accounting counsel to comprehend the ramifications and adapt to comply with the new regulations.