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

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  1. #841
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    May 2008
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    Quote Originally Posted by flyernzl View Post

    It is our opinion that, in its present form, the proposal will have far-reaching consequences many of which are unfavourable to investors, their tenants and the property market as a whole. Whether you agree with this view or not, something this consequential should not have its details and nuances decided on by a selected few. Making a submission to have your views considered is absolutely warranted. You can do so here. The substantive part of the submission template involves only two text boxes. It can't get easier than that.
    Thanks flyernzl.
    I've made my submission.

  2. #842
    Join Date
    Jul 2017
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    270

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    Quote Originally Posted by Wayne View Post
    Unfortunately to suggest that there may be 116,000 less rentals puts him in the standard media exaggeration league.

    If ring fencing of tax losses was passed, how many negatively geared residential property investors would then sell? 5%, 10%? 20%?, 50%?

    Most of these owners declaring a loss on earnings would presumably be in locations with low rental yields such as Queenstown, Wanaka, & Auckland.

    How many of the 116,000 would be impacted?

    Not all 116,000 would be impacted by ring fencing of losses - only those where tax losses are claimed against personal or household income - that is properties owned in individual names, and tax pass through structures such at look through companies (LTC) & partnerships.

    Property owned via non tax pass through structures (such as non LTC companies & trusts) would remain unaffected by ring fencing as they are unable to offset tax losses against personal income. The losses by these entities would still be able to be carried forward and offset against future profits - this is unchanged. Tax deductibility of expenses would be unchanged for these owners.


    Extract

    Confirmation from Inland Revenue last week that 116,000 property owners declared a loss on rental income earnings in the 2016/17 tax year shows that ring-fencing of tax losses for rental properties could soon result in 116,000 fewer rentals, Tenancies War spokesman Mike Butler said today.

    The response to my request under the Official Information Act also said that the average loss declared by each owner was $7138, and that includes both individual and non-individual (trusts, partnerships and companies) taxpayers, Mr Butler said.

    Owners who run a rental property at a loss can offet the loss against their other earnings to reduce their income tax liability.
    Last edited by Chris W; 16-02-2019 at 02:53 PM.

  3. #843
    Join Date
    May 2004
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    Quote Originally Posted by Wayne View Post
    The loss is not a 'cost' - it is a deferment.
    When the person gets to claim the accumulated losses against their profits will they return the recovery of those previous 'costs' back to the renters?
    No - they will double dip.
    I reckon most people would see it as a cost, even if it is technically a deferment as you say.

    Maybe once portfolio profits are being made, rents will increase at a slower rate than the general market. Or maybe not. Who knows. Anecdotally landlords with only 1 or 2 rental properties (estimated at about 80% of landlords) are more likely to set rents lower than professionals, especially if renters are long term or family.

    And landlords with only one rental who sell while carrying rental losses forfeit the losses. Can't blame them for not having a crystal ball and recovering the possible eventual actual loss when they can. In case.

  4. #844
    Join Date
    Sep 2004
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    Hastings
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    14,844

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    If small scale LLs set up a company and moved the rental (one or two) into that, would that offer more options for utilising any accrued losses?
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  5. #845
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    May 2008
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    Quote Originally Posted by artemis View Post
    And landlords with only one rental who sell while carrying rental losses forfeit the losses.
    Why is that?
    Can't you have a company with no rental?
    Or do you mean when the company is wound up - which could be a long time later?

  6. #846
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,019

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    Most people whoi incurr a loss do it during the earlier years of rental property ownership.
    Life becomes easier later in the business.

    Thus the likelihood is that less people will enter into rental property, as under the ring-fencing proposals those crucial first years will become much harder.

    Thus as we oldies fall off there will be fewer new landlords and the pools will shrink.

    So the academics, socialists and the envious will, over time, achieve their goal of eliminating private rental ownership.

  7. #847
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    May 2008
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    Where will tenants live if private landlords becomes extinct?
    I assume the govt will step in and provide rentals for all.
    How much will that cost taxpayers?
    Will taxpayers want to pay that much tax?

  8. #848
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    Mar 2007
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    Auckland
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    The concept is that once all tenants rent from the Government, political pressure can be brought to keep rents low.

    Who will pay?

    Well, no-one of course - it's all 'Free' !!!

  9. #849
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    May 2004
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    Quote Originally Posted by Bob Kane View Post
    Why is that?
    Can't you have a company with no rental?
    Or do you mean when the company is wound up - which could be a long time later?
    Wasn't clear sorry. Those with rentals in their own name/s, not in a company or trust, will be the ones impacted by ring-fencing losses. Those folk with one rental who sell while carrying a rental loss will forfeit the loss on sale.

  10. #850
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    Sep 2008
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    isn't the plan

    to make 55% of the population jobless + homeless

    those people will then vote for a HUGE new state house program with increased benefits

    to be paid for HUGE taxes on those with; houses, jobs + businesses

    what could possibly go wrong!

    first thing that springs to mind is taxing people's home's is an election killer for the middle class

    so they'll need to tax investment property even higher to make up for that
    have you defeated them?
    your demons


 

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