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Lies, Damned Lies & Deception

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  • Lies, Damned Lies & Deception

    The so-called Issues Paper, produced by IRD Policy and Strategy, can be found here. (A readable and downloadable pdf file)

    There has already been discussion on this bit of political chicanery, here and here, on the PT Forums.

    The political fraud starts with the Issues Paper title:

    Ring-fencing rental losses

    It is not about rental losses at all.

    It is about residential rental losses only.

    The lies by omission and deceit used by the IRD - likely at the behest of their political masters - start with that title and continue on, from there.

    Leaving aside the technicalities (which the IRD admits are complex and costly), the unprincipled use of divide-and-conquer, hung comparatives, emotional language and unsubstantiated assertions are rife in the document's founding presumptions.

    1) Long term buy-and-hold residential rental investors are lumped together with speculators. (denigration by association)
    1.6 The introduction of loss ring-fencing rules is aimed at levelling the playing field between property speculators/investors and home buyers.
    2) Residential rental investors are separated out from other businesses which often make losses in their start-up phase, on a divide and conquer basis.
    1.6 Rules which ring-fence residential property losses, so they cannot be used to reduce tax on other income, are intended to help reduce this advantage and perceived unfairness.
    3) Fair is used as a hung comparitive. Fair compared to what? That's not specified, of course.

    4) Section 1.5 contains all the usual sophistries (Being plausible but false arguments which are politically-correctly acceptable)
    1.5 While rental housing is not formally tax favoured, there is an argument that it may be under-taxed given that tax-free capital gains are often realised when rental properties are sold.
    Under-taxed? What a wonderful thing that must be. Must be similar to MPs' spouse's taxpayer-subsidised air travel and ex-PM perks, eh? They'd be subject to fringe benefit tax in the real world, of course. And any other business that's sold at a gain? Not mentioned. Funny, that.

    But isn't it good to see that sentence: "rental housing is not formally tax favoured!" (Sneaking in the word 'formally' sows seeds of doubt, of course)

    The fact that rental property investors often make persistent tax losses indicates that expected capital gains are an important motivation for many investors purchasing rental property.
    OMG! Every residential rental PI is often making a persistent tax loss!

    Revenue Minister Stuart Nash, in "encouraging feedback" on the proposed changes, says the "persistent tax losses" that many property investors declare on their investments indicate that they rely on capital gains to make a profit.
    Oh! Now it's just "many."

    “Changes would make the tax system fairer by ensuring that investors could not offset their losses on some property investments against their other income,” Mr Nash says.
    Ah! "Some!" Now we're getting closer to the truth.

    First, the IRD says all PIs are making a loss. And often, at that.

    Then Nash says many PIs are making a loss.

    Later Nash gets a small dose of truth serum and admits that PIs are making a loss on some properties. Neither the number nor the tax revenue foregone are specified, of course. (Bugger that - let's tar and feather the lot of 'em! Should be good for a few votes from tenants.)

    And all that BS is before we even consider that the alleged capitals gains are an inflationary illusion in most cases.

    So, all you fellow forumites need to get on to this. You need to ponder the deception, half-truths and nothing-like-the-truths and get a submission together.

    How and where to send a submission is carefully disguised in a closed loop of links on the IRD web site. It starts here:

    Tax policy news
    31 March 2018
    Inland Revenue is seeking feedback on a proposal to ring-fence losses on residential rental properties. The intention of the new policy is to level the playing field between speculators and investors, and home buyers. For more information see the Minister of Revenue’s media statement and the officials' issues paper.
    Hon Stuart Nash
    Minister of Revenue
    Media statement
    29 March 2018
    Feedback on ring-fencing rental losses
    Revenue Minister Stuart Nash is encouraging the public to make submissions to Inland Revenue before the deadline of 11 May 2018. For more information, including how to make a submission, see http://taxpolicy.ird.govt.nz.
    Ring-fencing rental losses
    An officials' issues paper, Ring-fencing rental losses, seeks feedback on on a proposal to ring-fence losses on residential rental properties. The intention of the new policy is to level the playing field between speculators and investors, and home buyers.
    Submissions close on 11 May 2018.
    There! You now know when submissions close. Just not how or where to send them.

    What does that tell you about the process?

    Links accurate as at 8.00pm Sun 15 April.
    Last edited by Perry; 15-04-2018, 09:09 PM.

  • #2
    This will force rents up - great for me.
    It will force some sales - feels like time to start buying.
    Not many down sides for rich old LLs.
    Not so good for new investors or tenants.

    Labour - the greatest party for old rich pricks!
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

    Comment


    • #3
      Originally posted by PC View Post
      This will force rents up - great for me.
      It will force some sales - feels like time to start buying.
      Not many down sides for rich old LLs.
      Not so good for new investors or tenants.

      Labour - the greatest party for old rich pricks!
      This forum needs a like button...
      Squadly dinky do!

      Comment


      • #4
        Originally posted by Davo36 View Post
        This forum needs a like button...
        I second that

        Comment


        • #5
          The issues paper is very disappointing - IRD usually does a better job than that. I suppose they are trying to reach a wide audience, and tax is one of those subjects that makes the eyes glaze over real fast. Until people wake up that it is going to hit them in the pocket.

          Which this proposal will, for a LOT of small property investors, especially those who purchased in the last few years.

          I feel, like Perry, that we landlords need to stand up to each and every attempt to smack us and our tenants - the tenants will pay in the end. That means making a submission, even if brief and covering personal impact only rather than the broader issues. Send your submission to [email protected]
          with “Ring-fencing rental losses” in the subject line. (I just did a submission to the tax working group - 13 words!)

          I hope that accountants make sure their clients know the impact of this policy, preferably before submissions close. Probably won't happen. It would be a useful service for the Bond Centre to notify landlords on its register, even if only those where they have an email address. Probably won't happen.

          Comment


          • #6
            Originally posted by PC View Post
            This will force rents up - great for me.
            It will force some sales - feels like time to start buying.
            Not many down sides for rich old LLs.
            Not so good for new investors or tenants.

            Labour - the greatest party for old rich pricks!
            As Bob Jones once said, "we all vote Labour around here!"

            Comment

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