Interest Deductibility Changes Explained for Property Investors

Office update, 15 October 2026. The byline records the original article; this guidance has been revised for Ray White Silverdale.

Interest deductions are a tax rule, not a return guarantee

For a landlord considering a Silverdale rental, interest is one part of the budget. A deduction can affect taxable income, but it does not remove the loan payment or establish that a property is affordable. Review the property’s costs and your tax position separately.

Understand the dates and conditions

IRD’s residential property interest limitation guidance permits 100% of interest incurred from 1 April 2025, provided the interest is not private and the general deductibility requirements are met. For 1 April 2024 to 31 March 2025, the permitted proportion was 80%. Earlier periods have their own rules.

The change does not make every mortgage cost deductible. Loan purpose matters; using a rental property as security does not turn private borrowing into a rental expense. Principal repayments are different from interest. Mixed use, refinancing and ownership arrangements should be checked with your accountant.

Keep records that explain the borrowing

Bring loan statements, drawdown and repayment records, evidence of how the funds were used and details of any private use. Ask which amounts relate to each tax year and whether earlier disallowed interest has any treatment when a property is sold. Do not assume it can be claimed retrospectively or that it can never be considered.

Read IRD’s interest rules for the current guidance. Residential rental deduction limits can also affect how deductions are used; ask your adviser to check those rules alongside the interest calculation.

Review the cash budget too

Allow for rates, insurance, repairs, management costs and periods without rent, as well as loan repayments. Consider what happens when a fixed rate ends or an unexpected repair is needed. Neither a tax change nor a suburb’s headline yield establishes the outcome for an individual property.

For relevant rental comparisons, request a rental appraisal. Ray White Silverdale can discuss the home and management service; keep tax advice with your accountant and lending decisions with your lender or adviser. Use the form below or contact the office.