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

 

Labour to 'ring-fence' property investor losses

Monday 15 May 2017 06:44 AM

Labour to 'ring-fence' property investor losses to close tax loophole

By Pattrick Smellie

May 15 (BusinessDesk) - Property investors will no longer be able to offset income in other areas against losses declared on residential property investments under new tax policy worth around $150 million a year and announced by Labour leader Andrew Little at the party's last national congress before the Sept. 23 general election.

Speaking in Wellington, Little announced a widely anticipated crackdown on so-called 'negative gearing', where costs such as interest payments on a residential investment property can be used to offset tax owed on income from other sources.

The policy is notable for the fact that, until now, Labour has said it would not make changes to the tax system ahead of a comprehensive review of the tax system if it forms a government later this year, having gone to the last two elections promising an electorally unpopular capital gains tax on investment properties, which was judged to have scared off many potential Labour supporters.

Describing negative gearing as a "speculator's loophole", Little told the Labour congress that "losses on rental properties will be ring-fenced meaning they will no longer be able to be used to reduce the tax that speculators owe on other income".

"This will create a level playing field for home buyers and help families get a fair shot at buying a place of their own.”

The loophole had led to around $150 million of tax being avoided annually, Little claimed, adding it had been "heavily used by foreign buyers and most of the gains go to the people on the highest incomes".

The policy would be phased in over five years, with Labour recycling the funds into funding insulation and heating to make homes warmer and healthier with grants of up to $2000 per home.

The new policy adds to Labour's existing policies to prevent foreign buyers of homes they don't intend to live in, taxing gains on the sale of houses sold within five years rather than the current two-year rule, and the KiwiBuild policy to build and onsell some 10,000 new, affordable homes a year over 10 years to help alleviate the chronic housing shortage, which is worst in Auckland. Labour is also sponsoring legislation that would require rented properties to meet basic warmth and dryness standards.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

57 Million Users' Data: Uber Breach "Utterly Preventatable"

Cybersecurity leader Centrify says the Uber data breach of 57 million customer and driver records - which the ride-hailing company hid for more than a year - was “utterly preventable”. More>>

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>

ALSO:

Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>

ALSO:

Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>

ALSO:

CO2 And Water: Fonterra (And Dairy NZ)'s Environment Plans

Federated Farmers support Fonterra’s bold push to get to zero emissions of CO2 on the manufacturing side of the Co-operative, both in New Zealand and across its global network. More>>

ALSO: