NZ Interest Deductibility Calculator

This calculator works out what percentage of your rental property mortgage interest you can claim as a tax deduction, for any tax year from 2022 to 2027, based on the phase-out and phase-back rules that reshaped residential property tax between 2021 and 2025. You enter the date you acquired the property, whether it is a new build (a Code Compliance Certificate issued on or after 27 March 2020), the tax year to test, your total interest paid for that year, and your marginal tax rate. It returns your deductible percentage as a headline result, plus a breakdown showing your acquisition date, whether it falls before or after 27 March 2021, your new build status, the tax year tested, total interest paid, the deductible interest in dollars, the denied non-deductible interest, and the tax saved at your rate. A year-by-year timeline table also compares deductibility for pre- and post-27 March 2021 acquisitions and new builds, from 2022 through 2027. Use it to check a past return, plan for the current 2026 year (now 100% deductible for every rental regardless of acquisition date), or understand how the rules applied to your property during the transition. Because several rule changes followed in quick succession, double check your acquisition date and new build status, as either one changes the result. Figures are indicative only and do not replace advice from a tax professional.

Updated  100% deductibility restored 1 April 2025. Interest limitation rules repealed.
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Interest to test

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Note on the 2022 tax year

The 2022 income year (1 April 2021 to 31 March 2022) straddled the introduction of the interest limitation rules. For the first six months (1 April to 30 September 2021), interest on pre-27 March 2021 loans was fully (100%) deductible. From 1 October 2021, the phase-out began at 75%. Many taxpayers used a blended rate for the 2022 return reflecting the split. This calculator uses the simpler annual figure of 75% for 2022 - if your 2022 return involved a genuine before/after 1 October split, work out the blended rate pro-rata by days in each period.

How we got here - the timeline

Interest deductibility on residential rentals has been a regulatory rollercoaster:

  • Pre-2021: 100% deductible, as is standard for any investment expense.
  • 27 March 2021: Labour announces interest limitation rules. New acquisitions: 0% deductibility. Existing properties: phase out over 4 years.
  • 1 October 2021: Rules take effect. Pre-existing loans: 100% deductible until 30 September 2021, then 75% (2022), 75% (2023), 50% (2024).
  • November 2023: National wins election, promises full restoration.
  • 1 April 2024: Partial restoration. 80% for all residential rentals regardless of acquisition date.
  • 1 April 2025: Full restoration. 100% for all. Interest limitation rules formally repealed.

Denied interest on disposal

Interest you couldn't claim during 2021-2025 can still be deducted when the property is disposed of AND the disposal is taxable (bright-line test or other land sale provisions). Keep records. The denied interest gets added back to your cost base or offsets the taxable gain, depending on the specific provision. This is one of the most-missed technical details for investors who held property through the limitation period.

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Frequently asked questions

Is all rental interest 100% deductible in 2026?

Yes. From 1 April 2025 onwards, 100% of mortgage interest is deductible for all residential rental properties, regardless of when you acquired the property or drew down the loan. This applies to the 2026 income year (year ending 31 March 2026) and all future years. The National-led government fully reversed the Labour-era interest limitation rules in two stages: 80% deductibility from 1 April 2024, then 100% from 1 April 2025.

What about the 2024 and 2025 tax years?

For the 2024 income year (ending 31 March 2024), the limitation rules still applied: 50% for pre-27 March 2021 acquisitions, 0% for post-27 March 2021 acquisitions. For the 2025 income year (ending 31 March 2025), 80% deductibility applied uniformly regardless of acquisition date. New builds (CCC after 27 March 2020) had 100% throughout. If you need to amend a 2024 or 2025 return, check the specific year's rules - this calculator handles all years.

How is a new build defined?

A property is a new build if its Code Compliance Certificate (CCC) was issued on or after 27 March 2020. New builds had uninterrupted 100% interest deductibility throughout the 2021-2025 transition period. This status was important under the old rules. From 1 April 2025, the new build distinction is moot for interest deductibility since all rentals get 100%. But new builds still have favourable treatment under the old bright-line 10-year rule (5-year carve-out for sales before 1 July 2024).

What about previously denied interest on sale?

Interest that was denied during the 2021-2025 limitation period can still be deducted when the property is disposed of and the disposal is taxable (typically under the bright-line test). You need to keep detailed records of the denied interest for each year. When the sale is taxable, you subtract the cumulative denied interest from the gain. This is a significant detail many investors miss - if your property is in the bright-line period and was affected by the old rules, the denied interest effectively carries forward.