Firstly, New Zealand does not have a comprehensive capital gains tax on residential property, despite capital gains making up a significant proportion of the income from residential property investment. Despite this, our current tax law allows full deduction of interest costs. This leads to a situation where landlords aren't taxed on a large portion of their income from their investment but can deduct their interest costs on highly leveraged assets in a way that doesn't occur in other parts of the economy—or doesn't generally. 