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.

NZ Interest Deductibility Calculator

Tests whether mortgage interest on your residential rental is 100%, 80%, 50%, or 0% deductible for any tax year between 2022 and 2027. Handles the pre/post 27 March 2021 acquisition split and the new build exemption. From 1 April 2025, full deductibility is restored across the board.

Updated April 2026 100% deductibility restored 1 April 2025. Interest limitation rules repealed.

Tax year	Pre-27 Mar 2021 acq	Post-27 Mar 2021 acq	New build
2022	75%	0%	100%
2023	75%	0%	100%
2024	50%	0%	100%
2025	80%	80%	100%
2026	100%	100%	100%
2027+	100%	100%	100%

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 31 March 2023, then 75%, 75%, 50%.
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.

NZ Interest Deductibility Calculator

Property details

Interest to test

Deductibility result

Phase-out / phase-back timeline

Note on the 2022 tax year

How we got here - the timeline

Denied interest on disposal

Sources

Related calculators