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  1. #11
    Join Date
    May 2007
    Location
    Hamilton
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    3,498

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    Quote Originally Posted by artemis View Post
    The Minister's commentary, link below, is easier to understand than the Bill for us ordinary folk.

    About homes in trusts - I think this paragraph says only one property in a trust can be exempted from ring-fencing. Since there are hundreds of thousands of trusts in NZ many unsuspecting trustees, settlors and beneficiaries may be affected.

    A significant number of family homes in New Zealand are owned by family trusts. The
    “main home” exclusion therefore ensures that a home owned by a trust can be regarded as a
    main home. Like with the bright-line rules, it is proposed that a dwelling owned by a trust
    only be considered a main home (so not subject to the deduction ring-fencing rules) if it is
    the main home for a beneficiary of the trust, provided that a principal settlor of the trust does
    not have a different main home. This restriction would ensure that trust ownership cannot be
    used to claim multiple properties as main homes, and so not subject to the loss ring-fencing
    rules.


    Also unsuspecting owners of a single rental property need to be aware that if they sell up while carrying rental losses forward they will forfeit them. Again I think so, but it isn't very clear so I might be wrong.

    http://taxpolicy.ird.govt.nz/sites/d...osrrm-bill.pdf

    1) Trust ownership - generally if you have rentals in a Trust making a loss, that loss is ring fenced anyway. Under current rules if the Trust had other income could offset, but most don't!

    2) single rental property owners - if you have losses, and always have losses and never make a profit, then why did you buy it? If to sell for a profit, then aren't you a trader!
    In my opinion this part is fair. You should not be able to run a loss for years and years, never make a profit, and then sell to get a tax free capital gain.


    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.

  2. #12
    Join Date
    May 2004
    Posts
    2,595

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    Quote Originally Posted by Rosco View Post
    1) ...... 2) single rental property owners - if you have losses, and always have losses and never make a profit, then why did you buy it? If to sell for a profit, then aren't you a trader!
    In my opinion this part is fair. You should not be able to run a loss for years and years, never make a profit, and then sell to get a tax free capital gain.

    Ross
    In my experience it takes quite a few years for a rental to become profitable under normal circs. Not a major if there is a long term plan. However, under the current government the goalposts are shifting. Already some changes and a lot more proposed. That long term plan is no longer the girl we married. So to ask, why buy in the first place? There is an answer.

    That is good for the landlords that don't sell, ECON101. But some landlords will decide to take their ball and go home.

    Trademe reports their Auckland for sale listings up 23% in October compared to 2017. 14% nationwide. That is a huge leap, esp Auckland - politicians proposing rule changes should ponder that number and find out who is selling and why. And who is buying. Some sellers will be landlords, but more worrying will be new builds if developers can't sell in a reasonable time frame.

  3. #13
    Join Date
    Mar 2013
    Location
    Auckland
    Posts
    1,594

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    Quote Originally Posted by Rosco View Post

    2) single rental property owners - if you have losses, and always have losses and never make a profit, then why did you buy it? If to sell for a profit, then aren't you a trader!
    In my opinion this part is fair. You should not be able to run a loss for years and years, never make a profit, and then sell to get a tax free capital gain.


    Ross
    What about the Mum and Dad investors who are propping up their rental, planning for it to be neutral after a few years and then cashflow positive by the time they retire, to provide a nice, wee supplement to their super? Only while it is still negative, the main earner suffers a catastrophe and now can't work anymore. They can't afford to keep propping it up, so have to sell. Capital gains are minimal and now they can't use their accumulated tax credit. They are well and truly screwed over by a change in circumstances.

    The thing is, shit happens to people and plans have to change. Anything implemented to punish the 'guilty' also punishes the innocent.
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/

  4. #14

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    Sell the entity not the asset.

    Quote Originally Posted by Keys View Post
    I too, believe this is part of their plan. I wonder if the ring fenced losses will be transferable to the new investor/owner.

  5. #15
    Join Date
    Feb 2013
    Posts
    293

    Default

    That's right , some have purchased with hard earned savings which was taxed as well.

    What other forms of investments have ring fencing tax?

  6. #16
    Join Date
    Feb 2013
    Posts
    293

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    How about profits are ring- fenced as well- pay no tax until losses occur.

  7. #17
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,284

    Default

    Shame we do not have an Arc de Triomphe to use as a backdrop for some voluble protests.

    But a demonstration of 14 PIs isn't likely to garner much attention, is it?
    Try Radenbrea Studios for hand-made designer jewellery. Especially if you're looking for a great gift for your lady love.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  8. #18
    Join Date
    Apr 2004
    Location
    Auckland
    Posts
    1,858

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    What I don't understand is why aren't the tenants up in arms?
    What happens when yet another rent subsidy is removed?
    Rents go up.
    Guess they just aren't too bright.
    Last edited by PC; 09-12-2018 at 04:33 PM.
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  9. #19
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,284

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    That's because they are not 'making the connection' between rents, the gummint's obtuseness, un-keepable promises, etc.

    Hell! Dhil blithely ignores advice on consequences he gets from officials.

    So tenants must be able to do the same, right?
    Try Radenbrea Studios for hand-made designer jewellery. Especially if you're looking for a great gift for your lady love.
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  10. #20
    Join Date
    May 2007
    Location
    Hamilton
    Posts
    3,498

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    Quote Originally Posted by Nick G View Post
    Sell the entity not the asset.
    There are still rules to capture selling the entity
    - doesn't get around brightline
    - general loss limitation rule, if you sell over 51%, then the entity forfeits the losses carried forward

    Also no lawyer or accountant will like a client buying an entity!

    Lastly - why would a new buyer, get the old buyers losses from a rental? Nothing to do with the new buyer!

    Ross
    More Profit from Property? TEACH ME MORE
    Ross Barnett - Coombe Smith Property Accountants
    Proud to give the best property advice for over 13 years.


 

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