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Exemption for new builds

What is a new build?

A new build is a self-contained residence that is issued a Code Compliance Certificate (CCC) under section 95 of the Building Act 2004, confirming the residence was added to the land on or after 27 March 2020. 

A new build is also a self-contained residence acquired off the plans that receives its CCC on or after 27 March 2020 confirming it has been added to the land.

A place only qualifies as a new build if it is self-contained. This means the new build would need to contain its own cooking and bathroom facilities and have its own entrance. The entrance could be from a shared access way, for example, a hallway shared by a block of flats in the same building.

A new build does not have to be made of new material or constructed onsite, so it can include modular and relocated homes.

The following are examples of new builds where a self-contained dwelling is:

  • added to bare land 
  • added to land that has an existing dwelling on it, whether stand-alone or attached (apportionment will be required)
  • or multiple self-contained dwellings replacing an existing dwelling
  • converted from a commercial premises or a hotel/motel.
  • Part of a dwelling converted from a single dwelling

In addition, an existing property can qualify as a new build if it was: 

  • previously on the earthquake-prone buildings register, but has been remediated and then removed from the register on or after 27 March 2020, or 
  • has been at least 75% re-clad because of weathertightness issues and received a CCC for the re-clad on or after 27 March 2020.

When does the new build exemption begin?

The new build exemption generally starts from the date a CCC is issued for a new build.

For new builds purchased off the plan, the exemption starts from the date you entered into an agreement to purchase it.

For motel and hotel conversions, the new build exemption starts from the date the local authority or building consent authority records indicate the conversion was complete.

Expiry of exemption for new builds

The exemption expiries 20 years after a new build is issued its CCC or when the new build ceases to be on the land (for example, it is demolished or removed), whichever is earlier.

Where a new build is acquired off the plans and before its CCC is issued, the 20-year fixed period runs from the date of the CCC. Special rules also apply for hotel/motel conversions, and for new builds that receive their CCC after a significant delay.

The exemption applies to anyone who owns the new build within this 20-year fixed period, and the timing of the exemption does not reset when the property is sold.

Exemption for land business

The land business exemption applies for interest relating to land if you hold that land as part of a: 
  • development
  • subdivision
  • land-dealing business 
  • business of erecting buildings on land.

Interest relating to remediation work and other expenses from ownership and development of the land will also qualify if this exemption applies.

Exemption for other property development

If you do not qualify for the land business exemption, the development exemption applies for interest relating to land that you develop, subdivide, or build on to create a new build. You can only deduct interest if existing tax rules allow you to, even if you qualify for the exemption.

The exemption applies from the time you start developing the land and usually ends when you sell the land or are issued a CCC for your new build. Once your new build receives its CCC, the new build exemption will apply instead.

Interest relating to remediation work done to an existing property that is not significant enough to create a new build will not qualify for this exemption.

Apportionment required where land is only partially new build land

If interest relates to land with both a new build and an old build, then only part of the land is considered new build land. In these circumstances you need to apportion the interest between the new build land and the non-new build land. Only interest incurred in relation to the new build land qualifies for the exemption.

Use this calculator to help you work out how much interest is deductible in relation to the new build if apportionment is required.

Property apportionment calculator

Last updated: 16 Mar 2022
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