Rentals falling short

Readers of my columns, and the many people I have spoken to at lectures will know that I have been predicting the dire consequences of the proposed tax changes ever since they were introduced in last year’s Budget. It beggers belief that the bureaucrats who dream these ideas up have no ability to work out the unintended consequences of their actions. What is even more surprising is that in all the years I have been in the business, not once has any Government agency asked anyone I know, let alone me, for any input. It seems to me that they make it up as they go along using theory and guesswork with absolutely no idea of the real world. The only “good” that will come out of all this will be higher rents and higher prices, which will be a just reward for what we property investors have to endure.

Tax changes ‘will reduce supply of rental property

by CATHERINE HARRIS 04/04/2011

Changes to the tax treatment of rental property are proving confusing for accountants and there are signs that the changes are deterring landlords from further investment.

Since Thursday, landlords have no longer been be able to claim depreciation on their buildings or use “loss-attributing qualifying companies” (LAQCs) to offset their personal income with rental property losses.

The New Zealand Property Investors Federation has called for the changes to be reversed, saying the loss of depreciation is likely to reduce the supply of rental property and raise rents.

Federation vice-president Andrew King said changes to the rental supply would be gradual, with a federation study finding only 8 per cent of owners likely to sell some or all of their property because of the tax changes.

However, 31 per cent of those who had intended to buy more rental property would now not do so because of the tax changes…

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