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.
Property details
Interest to test
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.