Tax benefits for investors offering long-term rentals

The government is trying to make it more attractive for landlords to offer their tenants long-term stability by offering tax relief.

From October 1, new and existing developments that have been built to be let will be exempt from the interest deductibility limits introduced last year as long as they offer rentals of at least 10 years. Last year’s changes placed some restrictions on investors deducting their interest expense.

On Friday, Housing Minister Megan Woods announced the changes.

She said tenants could request shorter leases if they wanted, and the development would still be eligible for the exemption. Tenants may terminate their contract at any time, subject to 56 days’ notice.

Tenants should also be offered explicit policies that will allow them to customize their tenancies beyond what is permitted under existing tenancy laws.

To be eligible, the same development must include at least 20 dwellings in one or more buildings.

“We believe security of tenure is essential for people who rent,” Woods said.

“This requirement will allow people to settle in and personalize their homes, reduce the frequency with which they have to find new accommodation and all the associated moving costs, especially as people face cost issues. of life, and will help them establish and maintain a connection with their community.”

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For new build-to-let properties, investors and subsequent owners will be able to deduct interest as long as they continue to operate them as a build-to-let development.

Existing properties are also exempt in perpetuity from last year’s interest deductibility changes if they meet the requirements after a transition period.

“We recognize the important role the build-to-rent industry can play in filling a gap in the general rental market by increasing housing supply, density and diversity,” Woods said.

Legislation for the changes is expected to be presented to parliament at the end of the month as part of the upcoming tax bill.

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