Proposed legislation has been released on property tax changes which were first announced on March 23rd 2021. The legislation will head to select committee and pass by next March as an amendment to existing laws.
Key information includes:
- "New" houses will be exempt for 20 years under new tax rules, to bar landlords from deducting the interest costs of their mortgage from their tax bill.
- Owner-occupiers who rent rooms of their house to tenants do not qualify as landlords under the rules.
This legislation gives effect to changes first announced by the Government in March, where plans were unveiled that bar landlords from deducting the interest costs of their mortgage from their tax bill. That would effectively increase the tax bill of each landlord by thousands of dollars a year.
The Government said it would exempt new build homes from the changes as this would encourage people to invest money in new housing. But the Government did not say what qualified as a new home under the rules.
Questions have been raised by experts including whether a home would still qualify as new if, for example, the landlord rented out the home after briefly living in it, or if the home was sold.
The Government has now clarified these rules, saying that a new home stays "new" for 20 years after it has received its code compliance certificate. The exemption will cease to apply beyond that 20-year point.