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  • 10 year bright line test

    Well, we knew it was going to happen - so it was when not if and now we know - it's from this weekend - 5 years is now 10 years for the bright-line test.


    But will this change give the Govt what they're looking for?

    cheers,

    Donna
    Investment properties will have an effective capital gains tax from this weekend with many investors paying 33 or 39 per cent. Interest deductibility for investment properties has also been removed.
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  • #2
    Plus investors get 6 months notice of non-deductibility of mortgage interest repayments on existing IPs and any property that settles from Saturday 27th will not be able to deduct interest payments. This is HUGE and I'm sure many investors will be wondering what they can do to balance the books.

    cheers,

    Donna

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    • #3
      Originally posted by donna View Post
      Plus investors get 6 months notice of non-deductibility of mortgage interest repayments on existing IPs and any property that settles from Saturday 27th will not be able to deduct interest payments. This is HUGE and I'm sure many investors will be wondering what they can do to balance the books.

      cheers,

      Donna
      There is only one answer Donna, or maybe 2!
      "DEBT BECOMES IRRELEVANT WITH INFLATION".

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      • #4
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        • #5
          HI All,

          It seems we got 10 years but it could have been 20 years had Treasury got their way but we may not have got the non-deductibility of interest. It seems this housing policy has been rushed through without proper analysis.

          Rents are sure to rise....may be that will be their next move - capping rent rises?

          Treasury warned Government rents could rise as a result of its major housing package, and suggested a far tougher extension of the bright-line test was better.
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          • #6
            Originally posted by donna View Post
            Well, we knew it was going to happen - so it was when not if and now we know - it's from this weekend - 5 years is now 10 years for the bright-line test.


            But will this change give the Govt what they're looking for?

            cheers,

            Donna
            Yea... that one was curious to me.

            Well. umm.. let me think .What's the difference between a 5 and a 10 year line?

            A five year line reduces the appeal for flippers already.

            One can only assume that the 10 year line ties up the cash for a decade, and that period of time is enough to put the more stubborn ones off.
            The ones who will dig in and wait out the five year term.

            The plan seems to be to stop more houses and people from being sucked into the vacuum cleaner that is land banking. (With a twist).
            Not to particularly target those ones already in the game.

            I still haven't figured this one out yet TBH.

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            • #7
              Alas, symptom-chasing in extremis.

              I suspect that wider NZ is experiencing quite a shortage of village idiots, now that these sort of policies have confirmed absolutely that they are all in gummint, clinging to comrade commissar socialist Cindy's apron strings.
              Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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              • #8
                Originally posted by McDuck View Post

                Yea... that one was curious to me.

                Well. umm.. let me think .What's the difference between a 5 and a 10 year line?

                A five year line reduces the appeal for flippers already.

                One can only assume that the 10 year line ties up the cash for a decade, and that period of time is enough to put the more stubborn ones off.
                The ones who will dig in and wait out the five year term.

                The plan seems to be to stop more houses and people from being sucked into the vacuum cleaner that is land banking. (With a twist).
                Not to particularly target those ones already in the game.

                I still haven't figured this one out yet TBH.
                A couple of things to think about:

                A ten year brightline severely restricts older people from investing in property, if you're 55 or older now and you buy a investment property then you're considerably more likely to end up sending 39% to the taxman compared to someone younger who can wait out the ten year spread.

                It's like the deductability changes, it's aim is to stop new players from getting into the game.

                Ultimately though how effective will it really be - to quote a good friend - if you're paying tax then you're making profit...

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                • #9
                  Originally posted by donna View Post
                  Rents are sure to rise....may be that will be their next move - capping rent rises
                  Despite frequent assertions to the contrary, look out for rent controls some time during the present parliamentary tenure of the current crop of socio-economic clowns in the drone house.



                  For the labour-reds-watermelons-alliance miasma, the list of broken promises will be in the tens, not units. Socio-commies have no conscience, political, ethical or otherwise. For them, ends-justifies-the-means expediency reigns supreme.
                  Last edited by Perry; 23-03-2021, 05:24 PM.
                  Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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                  • #10
                    https://fb.watch/4p9r_kE644/ video about brightline and interest deduction changes
                    Book a free chat here
                    Ross Barnett - Property Accountant

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                    • #11
                      Comment from Baker Tilly

                      The war on LLs continues
                      Unfortunately, the law of unintended consequences will probably have the most influence over the housing market. Previous tightening of the rules on landlords has seen shortages of rental properties emerge in provincial markets that had never previously experienced a shortage of rentals. Our expectation is that landlords would continue to exit the market, reducing the supply of available rentals and pushing up rents, causing the greatest harm to the most vulnerable.
                      Unintended consequences?! Wow! What might they be? See here:

                      Soaring house prices leaving more people without a home in BoP's Opotiki
                      15 Mar 2021
                      The item is not really about house prices, at all.
                      Originally posted by Newshub
                      The squeeze on rentals in Opotiki isn't going unnoticed by property managers Chris and Joanne Donkin who run CJ Rentals, one of the biggest rental companies in town. Chris says he understands why landlords are worried about the new law changes. "The concern is having a damaging or disruptive tenant in the property and the non-ability, without major issues of going through the Tenancy Tribunal, to remove that tenant."
                      For socio-commies, if one raft of law changes don't work as expected, then more must be needed to fix the problem.

                      Never, ever, under any circumstances, consider reversing the first lot that did not work as intended.
                      Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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                      • #12
                        Originally posted by Rosco View Post
                        https://fb.watch/4p9r_kE644/ video about brightline and interest deduction changes
                        I clicked the link Ross but didn’t get the video. Maybe you can load it in here as a video? Keen to see it as I am sure many others are too.
                        cheers
                        Donna
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                        • #13
                          Here you go Donna https://www.facebook.com/theproperty...4537653265050/
                          Kaye
                          www.streetsaheadpm.co.nz

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                          • #14
                            Saw in passing yesterday (not sure where) that the government is going to consult on rent increases no longer permitted for new tenancies until the one yea mark for the last increase has passed. Thin edge of the rent control wedge. Anyone else see that?

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                            • #15
                              Originally posted by Kaye View Post
                              Thanks Kaye.

                              Ross is saying - stay calm - and do the numbers. See his example also don't forget your capital gains.

                              The morning after and we're coming to terms with what's in front of us. Timing is more important now. As mentioned in another post - the new rules are telling older folk property investment may not be for you unless you're planning on holding onto your portfolio into retirement rather than selling up.

                              However there are loopholes see this post and the savvy investor will use them and find more . Plus Matthew Gilligan has a free webinar on tomorrow -

                              Bright-line and other housing policy rules

                              cheers,

                              Donna
                              SEARCH PropertyTalk, About PropertyTalk

                              BusinessBlogs - the best business articles are found here

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