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21-06-2007

Cullen looks at changing tax laws for investment properties

The Government is looking at removing a tax advantage for those who own rental properties.
 
It would mean an end to investors saving thousands of dollars a year.
 
200,000 kiwis own a second home and rent it out.
 
Currently if they make a loss, for example if the rent doesn’t cover your mortgage the IRD offsets that against your income tax and gives you a refund.
 
But the Government is looking at closing the loophole.
 
“There is an effective tax advantage for housing investment this is no longer something engaged in by a small proportion of the population,” Finance Minister Michael Cullen said.
 
Cullen says it is partly to blame for the housing boom as investors buy up second, third and fourth houses, looking for tax free investments.
 
But National says Cullen's idea is too late.
 
English and Cullen are so at odds over this and it boiled over into a select committee shouting match.
 
But away from that, Cullen needs support to pass this and Winston Peters appears to slamming the front door in his face.
 
“We have no agreement with labour on that," Winston Peters told 3 News.
 
A group representing landlords say the idea is a tax grab by the Government that will affect property investors and renters.
 
“They will have to go to mortgagee sales and others will have to put up their rents to cover their costs,” property investment expert Martin Evans said.
 
Michael Cullen's biggest problem with this idea is a lack of support in parliament.
 
And given Winston Peters reluctance to back it, it seems the Government has little chance of passing this into law this parliamentary term.

TV3

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