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Income Tax Act 2007

Tax credits and other credits - Terminating provisions

LZ 7: Maximum amount of credit under section LZ 6

You could also call this:

“Limit on tax credit for home vendor mortgage lending”

If you lend money to someone to buy a home and that loan is secured by a home vendor mortgage, you might be able to get a tax credit. The amount of credit you can get depends on how much you lent.

If you’re the only person who lent money, you can get up to $500 in tax credits in a year. This is explained in section LZ 6.

If you and other people lent money together, you need to do a bit of maths to work out your tax credit. You take the amount you lent, divide it by the total amount of the loan, and then multiply that by $500. For example, if you lent half of the total loan, your maximum tax credit would be $250.

Remember, the most anyone can get in tax credits for this type of loan is $500 per year, even if you lent a lot of money.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1518383.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Banking and loans
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LZ 6: Interest on home vendor mortgages, or

“Tax credit for interest from home vendor mortgages”

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LZ 8: Meaning of home vendor mortgage, or

“Explanation of a special home loan guaranteed by Housing New Zealand before August 1982”

Part L Tax credits and other credits
Terminating provisions

LZ 7Maximum amount of credit under section LZ 6

  1. If only 1 person has provided the loan secured by a home vendor mortgage, the maximum amount of tax credit that the person is entitled to under section LZ 6 in a tax year is $500.

  2. When 2 or more persons have provided the loan secured by a home vendor mortgage, for each person who has provided the loan, the maximum amount of tax credit under section LZ 6 in a tax year is calculated using the formula—

    (loan provided ÷ loan secured) × $500.

    Where:

    • In the formula,—

    • loan provided is the amount of the loan provided by the persons:
      1. loan secured is the total amount of the loan secured by the home vendor mortgage.

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