The National-led Government has proposed to reverse three current housing policy adjustments that would prove beneficial to property investors and landlords.
- Mortgage Interest Deductions:
Currently, there are limitations on mortgage interest deductions for residential rental properties. This has resulted in increased annual tax obligations for landlords. The National Party aims to address this by proposing a phased restoration of interest deductibility. Starting in April 2024, they suggest maintaining 50% of interest deductibility, increasing to 75% in April 2025, and reaching 100% by April 2026. This proposed adjustment is expected to have implications for property investors and may influence competition within the first-time homebuyer market.
- Bright-Line Test Adjustments:
Under the National-led Government, the timeframe for the bright-line test will see a significant reduction from 10 years to two years. This test imposes income tax on gains from the sale of residential properties within a specified period and was originally introduced to discourage short-term property investments. By July 2024, the test will return to the two-year timeframe last seen in 2015. This adjustment aims to manage short-term investments, potentially influencing the property market.
- No-Cause Terminations and Fixed-Term Tenancies:
The National Party is making moves to reintroduce no-cause terminations and bidding farewell to the automatic rollover of fixed-term tenancies.
These changes will provide landlords, like yourself, with the essential tools to address issues like property damage and consistent late payments. Ultimately, as landlords, you will receive substantially more flexibility and control over the tenants living in your properties.