Income Tax Act 2007

Deductions - Interest incurred in relation to certain land

DH 6: Interposed residential property percentage

You could also call this:

"How much of your property is not allowed as a home"

To calculate the interposed residential property percentage, you use a formula. The formula is disqualified assets divided by total assets. You express this as a percentage. You need to know what disqualified assets and total assets are. Disqualified assets are the value of the person's property that is disallowed residential property. Total assets are the value of the person's assets. If the person is a company, you also include assets held by lower tier companies when calculating disqualified assets and total assets, by applying the look-through rule for corporate shareholders, and section DH 4 is excluded from disqualified assets.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS675460.

This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > TaxesHousing and property > Buying and selling homes

DH 5: Key terms, or

"Important words to know about tax and housing"

DH 7: Grandparented residential interest, or

"Interest on a house loan that you can't claim back on your taxes"

Part DDeductions
Interest incurred in relation to certain land

DH 6Interposed residential property percentage

Interposed residential property percentage is the amount, for an interposed residential property holder (the person), calculated using the following formula, expressed as a percentage:
$disqualified assets ÷ total assets.$

Where:
In the formula in subsection (1)—
disqualified assets is the value of the person’s property that is disallowed residential property, but excluding—
1. property described in section DH 4; and
total assets is the value of the person’s assets.

If the person is a company, the items disqualified assets and total assets in this section are calculated to also include assets held by lower tier companies to the company by applying section YC 4 (Look-through rule for corporate shareholders), treating the person as the ultimate shareholder, to attribute, in proportion to the relevant voting interests and market value interests under that section, those lower tier assets.
For the purposes of this section, section DH 8, and the definition of interposed residential property holder, a loan entered into by a shareholder of a close company before it became an LTC is not affected by the company becoming an LTC.

Notes

Section DH 6: inserted (with effect on 27 March 2021), on 30 March 2022, by section 75 of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
Section DH 6(2)(a)(i): amended (with effect on 27 March 2021), on 31 March 2023, by section 43(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
Section DH 6(2)(a)(ii): repealed (with effect on 27 March 2021), on 31 March 2023, by section 43(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).