Interest Deductibility Changes
The Government recently announced that it will restore deductibility for mortgage interest on residential investment properties. From the beginning of this month (April 01), landlords will be able to deduct 80 percent of their interest expenses, with this increasing to 100 percent from 1 April 2025.
If you are a landlord with a mortgage on your rental property, this means that the interest you pay on your rental property can be deducted from your rental income when it comes time to submit your tax return next year. With your taxable income being lower, you will likely then pay less tax.
Further information on these changes can be found on the IRD website or talk to a member of our team today.
Changes to the Bright-Line Property Rule
Also announced this month is that for any properties sold on or after 1 July 2024, the bright-line property rule will only apply if the property is sold within 2 years of acquiring it. This has been updated from the current 5 years for qualifying new builds or within 10 years for all other properties.
The bright-line test calculates your net gain from a property transaction and requires sellers to pay income tax on the profits of any properties sold within the brightline test period, outside of their primary residential dwelling.
According to a recent article in OneRoof.co.nz, the Government’s changes to the bright-line test could potentially save close to 60,000 properties on average between $55,000 and $65,000 each in tax.
If you’d like to know more about what these changes mean for you, talk to a member of our team today.
Further information can also be found on the IRD website
Insuring a Healthy Outcome
According to the Financial Services Council NZ (FSC), ‘there is a looming social healthcare crisis globally, as well as nationally, as our aging populations lives longer, but not healthier’.
Locally, the New Zealand public health system provides a good level of access and care in the advent of serious illness or injury. However, with increasing waitlists for non-urgent medical conditions, health insurance plays an important role in ensuring that Kiwis have access to the treatment they need in a timely manner.
According to FSC research, “there has been an increase in Kiwis taking health cover in New Zealand, with 37% of respondents saying they had health insurance in 2023, up from 32% in 2022. It is the second most common type of insurance after life insurance and ahead of Critical Illness Cover.”
However, with the cost of insurance increasing due to rises in the Consumer Price Index, along with factors such as age and medical conditions, medical insurance can sometimes turn from an ‘essential’, into a ‘nice to have’.
When reviewing your insurance needs, it is important to make sure that you have the right policy in place that considers not only your health but also your financial circumstances – especially as there are ways to ensure that you have the cover you need, while also minimising the cost of rising premiums.
For example, this could include extending the excess on your Medical Cover from $NIL to $250 or $500 to assist in reducing the premium, extending the wait period on your income protection / mortgage protection benefit and reducing the claim term.
If you are interested in reviewing your life and medical insurance policies, or in getting cover in place, book a one-hour free complementary consultation today by emailing clientservices@threefold.co.nz