3. Question No. 3—RevenueANDREW BAYLY (National—Port Waikato) to the Minister of RevenueQuestion No. 3—Revenue3. ANDREW BAYLY (National—Port Waikato) to the Minister of Revenue: How many New Zealanders will lose the ability to deduct mortgage interest expenses from their rental income and how much additional revenue will this tax change generate?Hon DAVID PARKER (Minister of Revenue): I'm advised that neither the Reserve Bank nor the IRD collect data on the number of individual New Zealanders who deduct interest from their rental income from residential premises. However we do know from CoreLogic that investor activity in the housing market increased substantially over the past year. In quarter four around 40 percent of all residential property transfers were to purchasers who owned multiple properties. Without a significant policy change the proportion of homes owned by their occupants would've decreased further. In terms of the revenue consequences I've seen various estimates from commentators in the range of half a billion dollars or more. Any estimate will depend upon future interest rates final design details phasing and how much is invested by investors in new builds. That said the change is not about revenue; it's a response to the housing crisis to ensure that first-home buyers and other owner-occupiers get a fair go.Andrew Bayly: Will a mum and dad who take out a mortgage to buy a property for their son or daughter to rent while studying in another city be able to deduct the interest expense?Hon DAVID PARKER: I would have to consider that rather than giving an off-the-cuff answer. If the member would put that in writing as a primary question or send me a letter I'm very happy to give him an answer.Andrew Bayly: Will someone who has a mortgage on a farm that includes a house rented to an employee be able to claim all the interest on their mortgage as a tax deductible expense?Hon DAVID PARKER: We are consulting on details such as that.David Seymour: Did the Minister seriously just say that this Government introduced a major change to tax policy with no idea how many taxpayers it would affect or how much revenue it would raise?Hon DAVID PARKER: No.Andrew Bayly: Will a new floor extension to an existing rental property that increases the number of bedrooms count as a new build and therefore be eligible for interest deductibility?Hon DAVID PARKER: Again that sort of detail will be consulted upon.Andrew Bayly: Why is interest deductibility now considered a tax loophole when it has been a legitimate business expense for many decades for businesses farmers and others who own property?Hon DAVID PARKER: Homeowners don't get it. I think most New Zealanders realise that when they hear parties decrying the housing crisis and then opposing every measure that is substantial enough to make a difference those parties say one thing but then oppose every policy which will make a difference.Andrew Bayly: Where an investor has a mortgage on a property that includes commercial tenants on some floors and residential tenants on other floors will the investor be able to claim the interest from their mortgage as a tax deductible expense?Hon DAVID PARKER: For at least part of their interest payment yes.