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Income Tax Act 2007

Deductions - Interest incurred in relation to certain land

DH 4: When this subpart does not apply: exemptions for new builds, development, social or emergency or transitional housing, and council housing

You could also call this:

“This law doesn't apply to certain types of housing and land development”

This part of the law doesn’t apply to interest you pay in some special cases. You don’t have to worry about it for new build land for 20 years after it’s finished. The finish date is when the building gets its code compliance certificate or when the local council says it’s done.

You also don’t have to think about this law if you’re in the business of buying and selling land. If you’re developing land to make new builds, you don’t need to worry about it either, but only until you own the new build land.

The law doesn’t apply if the land is used by certain groups for special housing. This includes social housing, temporary places for people to stay while they look for a home, and other housing for people in need. It also doesn’t count if a council or council-controlled organisation uses the land for housing that’s cheaper than normal rent.

Lastly, this law doesn’t apply to Kāinga Ora–Homes and Communities and the companies it fully owns.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS675443.

Topics:
Housing and property > Buying and selling homes
Housing and property > Land use
Money and consumer rights > Taxes
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DH 3: When this subpart applies: companies, or

“This subpart applies to close companies, residential land companies, and certain company groups”

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DH 5: Key terms, or

“Definitions of important terms for deductions and income tax”

Part D Deductions
Interest incurred in relation to certain land

DH 4When this subpart does not apply: exemptions for new builds, development, social or emergency or transitional housing, and council housing

  1. This subpart does not apply to interest incurred by a person to the extent to which it is—

  2. incurred in relation to new build land; and
    1. incurred before the date that is 20 years after the earliest of the following dates for the new build land:
      1. the date on which the code compliance certificate described in section DH 5(7) is issued:
        1. the date that, in the records of a local authority or building consent authority, the relevant conversion or remediation is recorded as having been completed, in the cases provided in section DH 5(7)(d) and (e):
          1. the date that the relevant building work is entered into the records of a local authority or building consent authority as substantially completed, in the case of a code compliance certificate described in section DH 5(7) being issued subject to a building consent waiver or modification under clause B2.3.1 of the Building Code under the Building Act 2004.

          2. This subpart does not apply to interest incurred by a person to the extent to which it is incurred in relation to a business described in section CB 7 (Disposal: land acquired for purposes of business relating to land).

          3. This subpart does not apply to interest incurred by a person (person A) to the extent to which it is incurred in relation to land (the land) that is or was subject to person A’s undertaking or scheme involving development, division, or building for the purpose of creating new build land. However, the exemption in this subsection ceases for person A to the extent to which the land is new build land owned by person A.

          4. This subpart does not apply to interest incurred by a person for land to the extent to which the land is used by an exempt housing provider solely for 1 or more of the following:

          5. social housing, as defined in section 2 of the Public and Community Housing Management Act 1992:
            1. temporary accommodation for people in need while they seek, or are assisted in finding, more permanent accommodation:
              1. accommodation for people in need:
                1. services connected with housing or accommodation described in paragraph (a), (b), or (c).

                  1. This subpart does not apply to interest incurred by a person for land, to the extent to which the land is used by a council-controlled organisation, as defined in section 6 of the Local Government Act 2002, or a local authority, solely for 1 or more of the following:

                  2. housing for people assessed by a local authority as being eligible for accommodation at less than market rental:
                    1. services connected with housing described in paragraph (a).

                      1. This subpart does not apply to Kāinga Ora–Homes and Communities and its wholly-owned subsidiaries.

                      Notes
                      • Section DH 4: inserted (with effect on 27 March 2021), on , by section 75 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
                      • Section DH 4(4): replaced (with effect on 27 March 2021), on , by section 45 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).