From 1 April 2025, 100% of mortgage interest on residential rental property is deductible again in New Zealand. What changed, and what it means for landlords.
⚠️ This entry contains figures or rules that change with government policy or RBNZ settings. Check the current position at the source link below before relying on it.
Interest deductibility is the ability to claim the interest portion of a rental property loan as a tax deduction against rental income. From 1 April 2025 (the 2025–26 income year), 100% of interest on residential rental property loans is deductible in New Zealand.
Between 2021 and 2025 this deduction was progressively removed and then partially restored, which materially changed rental cashflow calculations. Full deductibility is back, which means many portfolios that ran at a taxable profit under the restricted rules now run at a loss on paper.
New builds were never subject to the limitation. A property with a Code Compliance Certificate issued on or after 27 March 2020 qualifies as a new build and was exempt throughout.
Only the interest portion of a repayment is deductible, never the principal.
Getting the deduction back does not mean you can offset a rental loss against your salary. Ring-fencing still applies — see that entry. More deductible interest means more landlords now run a rental loss, and that loss is trapped inside the residential portfolio.
Revolving credit and offset facilities require careful interest allocation, and IRD scrutinises this.
Last reviewed: 1 August 2026 · General information only, not tax advice.
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