Income Tax Act 2007

Deductions - Interest incurred in relation to certain land

DH 11: Denied amounts: treatment upon disposal of disallowed residential property

You could also call this:

"What happens to expenses when you sell a property you couldn't claim them for"

You have a property that you cannot claim expenses for. If you sell this property, the expenses you could not claim might be treated as a cost. This happens if the money you get from selling the property is income under section CB 6A or CZ 39. You might be able to claim the expenses as a deduction when you sell the property. This is if the property was a rental and the money from selling it is not income under section CB 6A or CZ 39. The deduction will be allocated under subpart EL. The expenses you could not claim are treated differently depending on the type of income you get from selling the property. If the money from selling the property is income under a different section, you might be able to claim the expenses as a deduction. You need to follow the rules under section DH 8 and other sections to work out what you can claim.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS675475.

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

Topics:

Money and consumer rights > TaxesHousing and property > Buying and selling homesHousing and property > Renting

DH 10: Limited denial of deductibility: simplified calculation of interest affected, or

"A simpler way to calculate interest on some loans for residential property"

DH 12: Valuation, or

"How to work out the value of your land for tax purposes"

Part DDeductions
Interest incurred in relation to certain land

DH 11Denied amounts: treatment upon disposal of disallowed residential property

An amount that relates to disallowed residential property and is denied under section DH 8 as a deduction that would have otherwise been allowed for a person is treated under section DB 23 (Cost of revenue account property) as a cost for the person of the disallowed residential property in the income year of the disposal of the disallowed residential property if the amount derived from the disposal is income under section CB 6A or CZ 39 (which relate to disposals of residential land within a given period from acquisition).
An amount that relates to disallowed residential property and is denied under section DH 8 as a deduction that would have otherwise been allowed for a person is allowed under this section as a deduction in the income year of the disposal of the disallowed residential property, and is subject to allocation under subpart EL (Allocation of deductions for excess residential land expenditure), if the disallowed residential property is or was residential rental property for purposes of subpart EL and the amount derived from the disposal of the disallowed residential property—
is income under a section other than section CB 6A or CZ 39; and
is not income under section CB 6A or CZ 39.

Notes

Section DH 11: 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).