LAQC's won't be scrapped. They are also used in forestry investment where early losses are high. So unless they define their uses more closely (i.e. stop their use for property investment), the Government won't want to upset the rural constituents.
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LAQC's won't be scrapped. They are also used in forestry investment where early losses are high. So unless they define their uses more closely (i.e. stop their use for property investment), the Government won't want to upset the rural constituents.
The political cynic in me reckons that John knows exactly what he is doing. I believe he intends to remove the money-go-round depreciation as a pre-cursor for the larger money-go-round, working for families.
It is essentially an accomodation supplement for all tenants isn't it?
Potentially it could be depreciation removed from ALL buildings, not just residential. As a property investor I have no qualms about this.
It makes sense as depreciation is really just a timing difference and at the end of the day if a property investor is relying on the tax benefit to make the investment viable on a cashflow basis, then in reality it would have to have been a marginal investment in the first place. Could be a case of the chickens coming home to roost...
Disc: if depreciation is removed on buildings and the reduction in tax benefit squeezes cashflow and results in some investors unable to retain their properties, I will be waiting with my chequebook open... :D
Yes. There is bound to be an over reaction, and residential property may become a sensible investment again for the first itme in many years. I don't think there is any intention to limit the change to residential though. All buildings will be affected - or that's what I thought he implied.
how would this affect listed property trusts
They will have to reduce their distributions, so they'll drop a little, unless existing holdings are exempted with new laws applying to new purcases only. If that is the case, their distributions should remain and they will look even more attractive compared to a new property-purchase, or buying into a new commercial syndicate or similar structure. So to answer your question - who the hell knows? We will have to wait for more details.
So all in all we could well see "Ring Fencing"
BB