Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Tax changes will affect tenants

Tax changes will affect tenants


The arguments for a Capital Gains Tax (CGT) have so far focused on tax equality, increasing tax revenue and reducing house prices. The Labour Party must have undertaken research into the effect on rental prices of their tax policies, but this hasn't been made public in the campaign yet.

The NZ Property Investors' Federation (NZPIF) has studied the potential effects of both a CGT and ring fencing rental property losses. These two policies will have a direct and major impact on rental prices.

The NZPIF figures show that the cost increases of these two proposed taxes on the average rental property will be around $100 per week, most of this coming from ring fencing rental property losses.

It is difficult to predict what effect this will have on rental prices. However Andrew Coleman from Motu Economic and Public Policy Research said "a capital gains tax will lower returns to landlords, and, for a given level of house prices, rents will be higher than they would otherwise have been."

There is no doubt that a proportion of the proposed tax increases will be borne by tenants through higher rental prices and more overcrowding.
In deciding if it is worth asking tenants to pay this price, we need to carefully analyse the benefits expected to be gained through increased tax revenue and lower house prices.

ENDS

Notes to Editors.
The NZ Property Investors’ Federation (NZPIF) is the only national voice representing private owners of rental properties. Twenty associations around New Zealand are affiliated to the NZPIF and these represent 3,000 memberships and 7,000 members.

The NZPIF has done the following analysis.
Using the latest REINZ and Tenancy Bond Centre data available, the current median dwelling is worth $427,000 and would rent for $450pw.
After accounting for expenses and current tax laws, it would cost a rental property owner $6,005 in the first year to provide this property as a home for a tenant. This is a large cost.

If a CGT was introduced, then the return to the owner would be reduced. Assuming property prices increase on average by 2.5% a year, then the lost return per year would be $1,683 if the property was sold in five years, $1,794 if sold at 10 years and $1,914 if sold at 10 years.

On a weekly basis, this would equate to between $32 and $36 or around 7.5% of current rental prices.
If ring fencing of losses was introduced, the first year’s cost of owning a rental property would increase from $6,005 to $9,971. This equates to a $77pw loss of cash flow which is 17% of current rental prices.

Link to the quoted Motu Economic and Public Policy Research - http://www.victoria.ac.nz/sacl/centres-and-institutes/cagtr/twg/publications/3-long-term-effects-of-cgt-coleman.pdf

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Extended Warranties: Godfreys Fined For Agreements It Sold

    New Zealand Vacuum Cleaner Company Limited (trading as Godfreys) was today fined $58,000 in the Manukau District Court after earlier pleading guilty to 10 charges relating to its extended warranty agreements. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news