limit deductions from taxable incomes of property investors, with the aim of reducing their enthusiasm to allow a more level playing field for first home buyers. Under the new rules, which will come into effect from 1 October, limit the ability of property investors to deduct mortgage interest incurred on residential properties which were acquired on or after 27 March this year. In the case of residential property acquired before this date, deductions will be phased out between 1 October 2021 and 31 March 2025.
The rules will not be applicable to the main family home or new builds.
According to Finance Minister Grant Robinson, the new rules are a part of a host of real estate measures introduced by the government since March this year to cool its red-hot housing market. “Tax is neither the cause nor the solution to the housing problem, but it does have an influence, and this is part of the Government’s overall response,” he said in a statement.
Nevertheless, the policy attracted sharp criticism from the opposition National Party, who claimed the move would only see an increase in rent, worsening the housing affordability crisis, instead of dampening prices. “This is another ill-conceived and rushed policy, with little real input from tax experts,” Shadow Treasurer Andrew Bayly noted.
