Interest is usually a landlord's biggest expense. After several years of limits, the rules changed again. Here is where things stand in 2026.
How much interest can I claim?
From 1 April 2025: 100% of the interest you incur on residential rental property.
1 April 2024 to 31 March 2025: 80%, regardless of when you bought the property or drew down the loan.
1 October 2021 to 31 March 2024: claims were restricted unless an exemption applied. The date you borrowed mattered.
What can't be claimed
The principal part of your mortgage repayments
Interest on the private part of a loan - for example, money used for your own car or home
If one loan was used for more than one purpose, the interest has to be split so only the rental part is claimed.
Exemptions that mattered in earlier years
Inland Revenue lists exemptions for a land business, property development and new build land. A new build is a self-contained home (its own kitchen, bathroom and entrance) that received a Code Compliance Certificate showing it was added on or after 27 March 2020. These exemptions are still important if you are filing or reviewing a return for an earlier year.
Selling a property taxed under the land rules
If you sell a property and the sale is taxed under the bright-line test or another land sale rule, you may be able to claim interest that was previously not allowed.
Who the rules cover
The rules apply to New Zealand residential property, including long-term rentals, short-stay rentals, vacant properties and residential bare land. Your main home is generally not affected. Most companies whose main business is not residential land are excluded, but close companies must apply the rules.
Need help? Yugraj CA is a Chartered Accountant (CA) firm helping property owners across New Zealand, fully online. Call 021 0234 6659, email ysm@yugrajca.co.nz, or see our property accounting services.
Disclaimer: This article is general information only, based on Inland Revenue guidance as at October 2026. It is not tax, legal or financial advice for your situation, and tax rules can change. Please talk to us, or another qualified adviser, before acting. Yugraj Singh Mahil Chartered Accountants Limited does not provide financial, investment or mortgage advice. Last reviewed: October 2026.
