Interest Deductibility NZ: A tax cut for landlords?
HTML-код
- Опубликовано: 12 сен 2024
- In this episode of Property Now, Ed from Opes Partners breaks down the significant overhaul of interest deductibility rules by the National ACT government.
Through a straightforward explanation and example-driven analysis, discover the nuances of the new tax regime and its implications for property investors.
Perfect for investors seeking clarity on future strategies, this episode promises a deep dive into tax planning in the property sector.
#propertyinvestment
#interestdeductibility
#rentalproperty
I think it’s extremely disingenuous and misleading to frame a reduction in tax burden as ‘not a tax cut’.
A reduction in tax paid = a tax cut.
Even if it’s technically a reversion to a previous state, the rules were that interest was not deductible, and now it will be. That’s a tax cut in real, “now” terms. It’s extremely clear that this talking point is intended to make rich investors feel better about taking away tax revenue (from a government that needs it for health, education, and infrastructure) by framing it as a “return to what’s fair”.
This change also nullifies the incentive structure the previous government put in place to support new builds.
I get that this “levels the playing field”, but as some other commenters have pointed out, maybe this isn’t a field that should be level. We have a housing crisis, and making it easier for investors to line their pockets with additional houses by reducing their tax burden is NOT the right way to solve this problem.
So more rentals came into the market as a result of taking away interest deductions?? Noooo.
More first time buyers as a consequence??? Noooo
Were houses cheaper as a result? Noooo
I like some elements of your talks but they're unfortunately bloated with political opinion which is far fetched at best and downright untrue at worst. You could just explain things without having to try to big up yourself for paying such a ridiculous tax rate as a poorly treated landlord. I'm a landlord by the way, just for the record. You are wilfully ignorant of the IRD's effective tax rate findings which reports that "HWIs who derived most of their income from property paid an effective tax rate of around 12%, which is significantly lower than the top marginal tax rate of 33% for individual income." If you're going to get political, at least be well rounded. Better, stick to the topic of your talk rather than banner waving for your favourite political party.
That’s BS mate , Ird included unrealised gains as income. It’s a ludicrous way to define income . It hasn’t come in . 12% rate is a politically motivated rate used by Ird under pressure from the last government
How did I know Ed would spout the same rhetoric of the likes of David Seymour and others about no other business being forced to calculate their profits like property investors do. The difference is that there is a housing crisis and property investing is unproductive to NZ economy. If we want to thrive as a country we need to be investing in things besides property.
Thanks for commenting, this is such a good conversation to have. The first thing I wanted to pick up is that the idea that "no other business being forced to calculate their profits like property investors do". That is true. And it sounds like we agree that the idea is correct. The question is whether we think that's fair or not.
I don't think it's fair that there are special rules for property investors. And sounds like you think that is fair. And of course, reasonable people can disagree on this 😀
One thing you've implied is that we can tax property investors more because there is a housing crisis. One genuine question for you - can you please walk me through how taxing property investors more solves the housing crisis? Looking forward to having a good discussion with you. Ed
Simple. It decentivizes people from investing in the first place. If investors believe investing in property is not worth it financially because of tax and other reasons, then they won't buy up all the affordable houses that should be reserved for first home buyers. If it wasn't for the housing crisis, I would agree with you that these tax rules needn't be in place, but the reality is that there is a crisis; and certain measures put in place by the government will help lessen the burden. A solution could be that investors can purchase an investment property above a certain price cap. While this may go against the idea of a free market, let me ask you, in 30 years time when the average house price sky rockets to astronomical levels, how do you expect the younger generations to afford their first home? On the current path, we are going to end up with a society of people who rent their entire lives. This is not a good thing because it means more young people are going to leave NZ for greener pastures, and our economy will suffer.
Property needs to be considered a special case compared to other businesses. Because banks treat property differently, they will loan against property - they’ll even allow you to load up the loan on your investment property and reduce / wipe the loan on your own home. But banks are not friendly like-this at all to non-property businesses. And for the country to become more productive we need a lot more investment in successful businesses rather than in property.
Don’t invest in housing ??? Because ??!?! There’s no shortage of houses , have you thought this out ? Invest in business is hard , kiwis are a little lazy and don’t want to work , productivity is very low . So businesses have to import quality labour from Asia and Europe and therefore need more houses 🤷
Yes man! I cant find anyone who explains this as well as you do! Awesome!
Very well explained video, I agree fully with absolutely everything you said except I’ve never understood this one thing.
“If landlords are forced out of the market then that would create less property’s to rent and therefore tenants would be living in tent city”. I don’t get that.
Lets take it to the extreme. If landlords were forced out of the property market and all of a sudden there were a surplus of 500,000 ex rental properties to hit the market, THAT would ‘have to’ put downward pressure on what the property’s worth and therefore he who was renting before could now pay their $80,000 (total cost) for their new first home and live happily ever after, and there’d be no more renters. I mean, it’s not like a landlord burns down his rental property upon exiting the market, or that people rent just for shits and gigs.
Labour government removing a landlord’s ‘right’ to tax deductibility on the interest portion of his loan in the name of deterring landlords from entering into the market, however, is truly criminal, even spiteful. I mean, how does a landlord be deterred from entering when he’s already ‘in the game’? It’s just a wicked ‘spite’ (against landlord) tax!
When we talk about property investment as a business, I would be far more willing to accept interest deductibility if landlords accepted all the other rules that comes with being a business. I cannot tell you how many rentals I’ve had that had leaks, had holes in the walls, no heating etc. if it’s not profitable for you to be a landlord you should sell your investment. Yet this govt seems intent on keeping landlords investments viable rather than simply allowing them to sell if it’s not profitable.
I’m sure you didn’t want this to turn political and I appreciate the video, I just don’t necessarily subscribe to the idea that this is good policy.
Then move out , don’t stay there and the market dictates the price !! Pretty simple . You can’t have your hand held for ever !!
@@paulleighton7078 it’s not simple, for one important reason - we don’t have enough houses.
From a personal perspective I now own my own house and rented for many years so it’s not like I don’t have a range of experience here either
Can you please do a comparison video comparing owning a $330k rental property outright and owning 2 or more of the same $330k rental properties with split equity and loans to suit? I'm wanting to see if it makes more financial sense to own outright one property or to have loans and own multiple properties. Thank you in advance
Thank you very much fior explaining it.
No worries, glad that it's useful for you
What do you mean by “that is why you top up mortgage buy”
They are totally level if they build new or social... you know, exactly the types of rental accommodation that we want to encourage.
This policy had the fundamental ability to influence rental levels and housing stock. And between owner occupiers and investors. If we have 0-3% pa capital gains over a 2 year period, watch investors jump in.
Thanks guys 🔥
Awesome glad you liked it. Ed
What’s the different do you think for no loan landlord?
If you don't have a loan on your investment property, then there's no difference for you. If you don't have a loan, there's no interest, so no interest to deduct. So whether or not the tax rules change, you are not impacted in this situation. Ed
I guess the message here is: take advantage of the new deductibility laws by not rushing to pay off your mortgage if you don’t need to
It shows never vote for labour and their hanger on parties with their envy tax ideas. How dare you work and are wise with your money we know best