The Government Restores Interest Deductibility on Investment Properties

Updates on tax reform have been announced, with Associate Finance Minister David Seymour announcing that the government will reinstate deductibility for mortgage interest on residential investment properties.

The government will phase in interest deductibility on mortgage interest paid on residential investment properties. Landlords will be able to claim 80% of interest expenses from April 1 2024, moving to 100% from April 2025.

The modification to the interest limitation rule will be included in the Taxation (Annual Rates for 2023/24, Multinational Tax, and Remedial Matters Bill), which is currently undergoing review by a select committee.

The report on this bill is expected by 29 March 2024.

This announcement offers clarity for property investors seeking more precise details on the changes, especially for the 2023/2024 tax year. While some investors might be disappointed that the changes won't take effect this fiscal year, this is being seen as positive news for property investors as it provides increased certainty and confidence in the market.