Save Cash By Investing In The Right Property: Why Investors Are Turning to Newbuild Properties

Cashflow is an important part of any property investment, but recent changes to the tax treatment of newbuild properties have rallied investors.

With several major banks dropping their mortgage rates below 6%, the property market in New Zealand is buzzing with renewed energy.

For many investors, this shift has brought cash flow back into focus, especially when weighing up the pros and cons of new builds versus existing properties.

One of the biggest factors driving this conversation? Interest deductibility on newbuild properties.

What Is Interest Deductibility (And Why Does It Matter)?

Interest deductibility allows property investors to claim mortgage interest payments as a tax-deductible expense.

For years, this was standard practice across all investment properties in New Zealand.

However, recent tax reforms phased out this benefit for existing properties while retaining it for new builds. This has had a major impact on investment strategy because:

• New builds still allow full interest deductibility
  

• Existing properties no longer qualify, making them more expensive to hold on a cash flow basis
  

For investors, this difference can mean thousands of dollars per year, especially as interest rates rise.

How Interest Deductibility Impacts Cash Flow

Let’s break it down with a simple example:

Property purchase price: $650,000

We’ll compare a new build (with interest deductibility) versus an existing property (without it).

In a typical cash flow analysis:

• The new build’s interest expense can be claimed as a tax deduction, which reduces taxable profit
  

• This means you pay less tax, lowering your out-of-pocket cost each month

Even if the property shows no paper profit initially, that’s often a good thing. It means you’re not paying unnecessary tax while still benefiting from capital growth over time.

In fact, our analysis shows that owning a new build can be up to 38% cheaper to hold simply because of the tax savings from interest deductibility.

Why This Matters Across a Portfolio

Now, imagine this across multiple properties.

If you hold several existing properties that are no longer interest-deductible, your taxable profit rises, even if your cash flow hasn’t improved.

This means you could end up paying thousands more in tax on paper profits you never actually see in your bank account.

This is why many experienced investors are now adding new builds to their portfolios. Not only do new builds come with tax benefits, but they also offer:

• Lower maintenance costs (brand new fittings and warranties)
  

• Higher tenant demand for modern homes

  
  

• Better compliance with Healthy Homes standards
  

The Impact of Lower Interest Rates

As interest rates fall below 6%, the benefits of interest deductibility become even more pronounced.

Lower rates mean:

• Cheaper borrowing = higher cash flow
  

• Tax deductibility compounds the savings, freeing up capital to reinvest or reduce debt faster
  

For investors with mixed portfolios (some existing, some new), using new builds to balance out the tax liabilities from older properties is becoming a popular strategy.

Why New Builds Are Back in Favour

Interest deductibility isn’t the only reason new builds are attracting attention, but it’s a big one.

Combined with lower rates and softening property prices in some regions, 2025 is shaping up to be a window of opportunity for investors who understand the numbers.

The bottom line? If you want to optimise your property portfolio’s cash flow, interest deductibility can’t be ignored.

Key Takeaways for Investors

• Interest deductibility makes new builds significantly cheaper to hold
  

• Lower rates amplify this effect, improving cash flow even further
  

• New builds can offset tax burdens from existing properties
  

• Cash flow is king - especially when scaling your portfolio

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How Can We Help You?

We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.

What Does This Look Like?

We use a 3-step process:

1. We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.

2. This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.

3. Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.

Who Are We Right For?

We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.

How Much Does It Cost?

Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.

What Do We Do, And What Don't We Do?

What We Do

We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out.What We Don’t Do

We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.

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