New Builds - A Very Important Date
Written by Brent Smith
The Government last week announced a very important date for investors of new build investment property – 27th March 2020.
Any property newly built with a Code Compliance Certificate (CCC) dated after the 27th March 2020 will be allowed to have the interest charged on any borrowings on the property to be deductible for 20 years from the CCC date, regardless of who the owner is over that period.
The property may change hands, but the deductibility stays with it for the benefit of the new owner. This is a very important change to the Government’s proposal to disallow interest deductibility on rental property. See the table below, that sets out the sliding scale of reduced deductibility on all residential investment properties acquired before 27th March 2021, excluding properties with a CCC date on or after 27th March 2020.
This change is yet another boost to the building industry and ensures that construction of new properties continues at pace to alleviate the “housing shortage” New Zealand wide.
These changes mean that it is essential your future property investment decisions consider the 27th March 2020 date. Given the interest deductibility on a new build can be transferred for 20 years from the issue of CCC (after 27th March 2020), consideration around that date is now vital, even if you won’t have any debt, as the future deductibility will have huge appeal and therefore a likely positive impact on the re-sale value.
It is important you take the advice of your accountant for what is best in your personal circumstances. If you are looking for a good accountant that understands property tax law, ask the Iron Bridge team and we will point you in the direction of some trusted professionals.
Download a copy of this blog here.
