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Poll: How would ring-fencing of residential rentals affect you?

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  1. #921
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    Sep 2004
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    Hastings
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    Default

    I wonder if Labour supporters said the same thing when promised 10,000 affordable houses-per-year?
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  2. #922
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    Jun 2004
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    Default

    Quote Originally Posted by Perry View Post
    I wonder if Labour supporters said the same thing when promised 10,000 affordable houses-per-year?
    Probably not - they probably didn't vote on just one thing!

  3. #923
    Join Date
    Sep 2004
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    Hastings
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    Default

    Did all of this happen as suggested? Or was it a little teacup storm?
    Quote Originally Posted by artemis View Post
    Wonder if they have extrapolated the fiscal impact as rentals reach break even with a massive tax credit. Or how trust and company ownership structures will avoid the ringfencing by tax effective distributions. Or what the impact will be on rents when landlords have to reach even further into their own pockets every week.

    Little unveiled the latest plank in Labour's housing policy at the party's election year Congress in Wellington today.

    He said Labour will:

    Ring-fence losses on rental properties so they can no longer be used for tax breaks on other income. It will mean losses can only be applied to income from housing.

    Use the estimated $150 million in increased taxes for $2000 grants toward insulation and heating.

    Negative gearing will be phased out over five years.


    http://www.nzherald.co.nz/politics/n...ectid=11855870
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  4. #924
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,656

    Default

    Over 5 years would have been nice!

    There is also a lot of unintended consequences!

    1) Rental in personal name with loss. Huge profit in Trust from rentals, allocates to individual = Can't offset profit and loss :-(
    2) Rental in personal name with loss. Huge profit in normal company, allocated as dividends or shareholder salary to individual = Can't offset profit and loss :-(


    Ross
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  5. #925
    Join Date
    Mar 2007
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    Auckland
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    3,071

    Default

    The grants disappeared onto the never-never as well.

  6. #926
    Join Date
    Sep 2004
    Location
    Hastings
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    15,230

    Default More Stuff & Nonsense?

    Quote Originally Posted by Bob Kane View Post
    I'm hoping Tony Alexander will give his thoughts in his next newsletter.
    Do you subscribe?

    Here's the aforesaid pundit's latest nostrum edict
    .
    Quote Originally Posted by Stuff
    Independent economist Tony Alexander said the virus, [corona] of which there have so far been more than 6165 confirmed cases and more than 130 deaths, could have an impact on house prices.
    So could the moon. (Don't the sun and moon have coronas?)

    Independent econ-o-mist?

    Or independent-of-reality econ-o-mist?

    Maybe Tonyeo and Shammy should join forces?
    Last edited by Perry; 05-02-2020 at 08:41 AM. Reason: fixed typo
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  7. #927
    Join Date
    Jun 2004
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    10,537

    Default

    Quote Originally Posted by Perry View Post
    Do you subscribe?

    Here's the aforesaid pundit's latest nostrum edict
    .


    So could the moon. (Don't the sun and moon have coronas?)

    Independent econ-o-mist?

    Or independent-of-reality econ-o-mist?

    Maybe Tonyeo and Shammy should join forces?
    With Tony it is far better to read the whole thing, his reasoning included, than just a headline.
    The good thing with Tony is he includes his reasoning - if you don't agree with the reasoning then discount the message.
    Last edited by Perry; 05-02-2020 at 08:41 AM. Reason: fixed typo

  8. #928

    Default Ring Fencing: LTC or Company

    With the latest ring fencing, will that make more sense to form a company for property investment rather than LTC?


    Here are the main points:

    Assuming you are a PAYE under the top tax bracket of 33%.


    losses will be ring fenced under LTC & Company entities,.


    While profits under LTC must be distributed to the directors and taxed at the individual tax rate (33%), profits will be taxed at 28% under a company.
    Under LTC when selling, capital gain is distributed to the directors without TAX, and the same applies under company if shareholders pass a resolution and liquidate the company (Better to hold a single property under a company)

    Everything changes if your tax rate is 17.5% or under or you hold multiple properties that can offset each other under LTC.

    Any Idea?

  9. #929
    Join Date
    Oct 2013
    Posts
    1,678

    Default

    Quote Originally Posted by orig View Post
    With the latest ring fencing, will that make more sense to form a company for property investment rather than LTC?


    Here are the main points:

    Assuming you are a PAYE under the top tax bracket of 33%.


    losses will be ring fenced under LTC & Company entities,.


    While profits under LTC must be distributed to the directors and taxed at the individual tax rate (33%), profits will be taxed at 28% under a company.
    Under LTC when selling, capital gain is distributed to the directors without TAX, and the same applies under company if shareholders pass a resolution and liquidate the company (Better to hold a single property under a company)

    Everything changes if your tax rate is 17.5% or under or you hold multiple properties that can offset each other under LTC.

    Any Idea?
    The main issue with a company is the difficulty getting capital gains out (assuming it holds more than one thing, so you don't want to liquidate it).

    Otherwise I really like ordinary companies. They provide significant tax planning benefits in terms of deferring income. If you are in the 17.5% bracket you can distribute the income right away, if you're in the 30-33% range you leave it in the company taxed at 28%, and declare it as a dividend later in the future - if planned well with a parental leave or sabbatical you can utilise low tax rates for income earned years previously.

    But the lack of getting capital gains out can be a real big downside for many people.
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  10. #930
    Join Date
    May 2004
    Posts
    2,885

    Default

    On Q&A today Mr Bridges said a National government will reverse ring fencing of rental losses, keep new insulation standards and reverse the other Healthy Homes standards 'by and large'.

    Also said he will be making a big economic speech tomorrow, Monday.


 

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