ACT Leader and Associate Minister of Finance, David Seymour, is reintroducing a significant policy shift for landlords: starting next month, they’ll regain the ability to deduct interest expenses on their tax returns.
This move carries substantial implications for landlords, tenants, and the broader housing market.
From April 1, landlords can once again claim 80 % of interest expenses, with the full 100 % deduction slated for April 2025.
This reversal of a previous government decision, which closed the deduction in 2021, reflects a critical adjustment to tax policy and is expected to have profound effects on rental affordability and the overall tax landscape.
Despite the previous closure of this deduction, investor demand had waned due to various economic factors, including rising interest rates and stricter lending regulations. ACT is of the view that that restoring interest deductibility will alleviate financial strain on both landlords and tenants, who have been grappling with escalating rents amid increased borrowing costs.
This will help new migrants, many of whom are of Indian origin to find an affordable place to live in.
Recent data from the Trade Me property rental price index underscores the urgency of this policy shift, with rents reaching record highs, particularly in key urban centres like Auckland and Wellington.
Interest deductibility will play a key role in attracting and retaining private investors in the market.
A fairer tax system that treats rental income equal to other forms of business income, is important to attain a good balance for owners and renters.
While new builds will continue to benefit from full interest deductibility for 20 years, Seymour stresses the broader implications of this measure, advocating for sustained investment and development to address housing challenges comprehensively.
Additionally, the coalition government’s plans to streamline the approval process for build-to-rent (BTR) developments signal a proactive approach to attract institutional and offshore investors, potentially expanding the rental housing market. These policy shifts can be seen as catalysts for increased investment in BTR projects, offering long-term benefits for both investors and tenants.
The reintroduction of interest deductibility represents a key moment in housing policy, with far-reaching implications for rental affordability, investment incentives, and the broader economy.
ACT emphasises the importance of establishing a fair tax system that treats rental income on par with other forms of business income, thereby achieving a harmonious balance between the interests of property owners and renters.

Rahul Chopra is ACT’s Mt Roskill Candidate and

works closely with Party Leader, David Seymour