Mortgage tax deductions to be restored from April - Seymour

Landlords will once again be able to claim tax deductions for interest on residential investment property from the start of next month.

The policy was promised among tax reforms announced by the new coalition government late last year.

David Seymour, the leader of the ACT Party and the associate minister of finance, said the change would benefit both landlords and renters.

"The government's restoration of interest deductibility will ease pressure on rents and simplify the tax code," he said.

It would take effect from 1 April, when landlords would be able to claim 80 percent of their interest expenses against tax, and would be increased to 100 percent, from 1 April 2025.

"Landlords have been hit with a double whammy of rising mortgage interest rates and increasing interest deductibility limitations during a cost-of-living crisis. These costs are inevitably passed on to tenants, one of the reasons New Zealand has all time high rental costs," Seymour said.

"This heaped pressure on landlords and renters alike by reducing the number of rentals, pushing rents up, and making it harder for Kiwis to save for their first home."

New Zealand needed to create to encourage investment and development, and this policy would help, he said.

"Competition helps keep prices affordable. Reducing supply reduces the number of options and drives up prices," he said.

"Removing the ability for landlords to claim interest expenses made residential properties less attractive and reduced the pool of properties for tenants to choose from."

The changes would be made to the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, which is before a select committee.