Possible tax changes for LAQC "ringfencing loses"

[newinvest]

In the herald recently the topic of the government investigating to possibly remove the ability to distribute losses to personal income within LAQC's (therefore ringfencing loses)

1) What is the likelihood of this happening? as it will have a dramatic effect on most properties under LAQC's.

2) What are the possible exit / defensive strategies to be aware of now whereby you could reduce or totally eliminate the negative effect should it happen?

Interested in any thoughts...

[essence]

LAQC losses

Hi newinvest

These comments have been around for a while. There is still an underlying public thought that investors/landlords are mean and shouldn't be able to make a profit from property.

In the present environment (house market going "cold"), it would take a brave?stupid? government to implement any change in the rules. There are investors using the LAQC credits to keep their businesses going. Take the ability away to claim LAQC credits and the investors would wonder why they were in the housing sector at all.

Successive government has stuffed up the private sector housing arena. They have consistently given conflicting signals to investors and to tenants, to the wider banking sector (with exchange rates).

IMHO, taking away the benefits of the LAQC, investors will sell properties, creating a glut on the market, lowering the general market price, removing properties available for rental creating a accommodation shortage.

It would be a brave?stupid? government indeed.

[Hound]

In a roundabout way the LAQC structure effectively subsidizes
tenants rents. The talk is only saber-rattling as labour would be screwing the very people who support them, and I believe they realize that.

[[email protected]]

Right on Hound. It would drive up property values and rents. People would get out of property and put money into shares or other asset classes creating a major problem for Helen Hitler to try and house everybody.

It's a stupid idea but anything is possible with this government.

[Glen]

I wonder what would happen in the extreme, if the government actually went through with such nonsense?(any other thoughts?).......not that I really think they would,....as they/we/society really couldn't handle the real costs and implications this would impose!

[mandi moo]

I ask this question often... What if they wipe LAQC's to investors..... The best answer I have to date is..... "They wont as politicians all own property, they will be shooting themselves in the foot" I sit with my fingers crossed and hold on to this comment in hope

[SuperDad]

mandi moo,

What makes you think that politicians use LAQCs? Even if some of them do, that won't stop a move against LAQCs.

I suggest that the move against LAQCs will only happen if it is politically expedient to do so. With the press currently reporting falling sales and longer times on the market for houses, I think that the focus will go off property investors. The main political issue this election will be tax cuts. People will forget about us greedy capitalists, and focus on what is in this election for them.

Paul.

[mandi moo]

SuperDad.... I am a novice investor and am currently developing a knowledge base... I am only young and am currently building a portfolio.... have 3 properties at present.

I am new to this fourm and enjoy learning from you all. I have learnt way more here in 3 days than I ever did at property mentoring for 1 year and endless seminars. I enjoy the discussions and look forward to developing a more sound knowledge base.

[SuperDad]

mandi moo,

The Treasury and Reserve Bank put out a combined report over a year ago, which argues against ringfencing losses in LAQCs. Google "Supplementary stabilisation Instruments Report" for a good read.

Paul.

[CJ]

The head of the IRD at a select committee hearing said that there is no incentives to housing that isn't avaliable to other businesses.

To remove LAQC benefits for property ownership could be done but they would need a very good reason to unlevel the playing field.