Black Monday

[jonu]

If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market?

I think arekaywhy is suggesting the govt keeping out of the way is the "incentive". Can be a big disincentive when you know the govt is going to continually change the rules.

[Bjauck]

If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market?

Investments should be taxed on their total returns, whether capital gains or annual income. To tax capital gains differently from income gains is messing with the market. Investment decisions have been skewed in favour of those that produce capital gains at the expense of those that produce income. Of course the borrowing for owner-occupied housing which produces neither taxable income nor taxable capital gains sucks up so much lending. So it is already a totally unequal environment.

[Biscuit]

Investments should be taxed on their total returns, whether capital gains or annual income. ......

I do not agree with that, or at least I think it is a more complex thing than is made out. Everything moves in value against everything else. Its problematic to talk about capital gains. You buy a house, at the end of 50 years it is still just a house and still worth one house (minus depreciation - that you can no longer deduct). It is arguably nonsense to say you have made a capital gain. If you borrowed all the money to buy the house and paid only interest then you could work out the "capital gain" as the difference in the dollar value of the home minus the interest paid (no longer deductible). If you paid in cash then there is no capital gain. Also if you lived in the house and didn't rent it out there would be no income with which to pay the tax on the nonexistent capital gain.

[SPC]

Every investment opportunity that has ever existed comes with a number of obvious and perhaps not so obvious risks. Be it shares or cash or classic cars or art or stamps or phone cards or... surprise.. property. Of course when you buy a house for investment purposes there is no disclosure statement but we all know what the risks are, and as is the case with EVERY investment class these risks include include 'changes in legislation'. The government can and does adjust tax legislation to suit it's fiscal and social objectives continuously. It has now chosen to do so regarding interest offset for borrowed money. It's no great surprise. Better also get ready for insurance cover to be withdrawn eventually due to climate change affects as well. It's nothing to do with fairness or betrayal. It's just risk.
No asset class is without risks.

[Panda-NZ-]

NZD is getting absolutely thumped on the housing news.

Great news, will help to build a real economy based on exports rather than migration and property hoarding.

Yes, top of my list for getting out of the markets way would be scrapping of the accomodation subsidy.

Agreed..

[Getty]

In my opinion, the latest govt housing policies may benefit a few new home buyers who are near to having their deposits to buy ready, if the policy works as intended, but at the expense of far greater numbers of rent payers who will face increased rent,

That in turn means those renters will then find it harder to save their home deposit, thus defeating the changes.

It will also lead to those same private renters putting themselves on the state housing waiting list, expecting subsidised rent, and thus putting more pressure on state housing, propped up by taxpayers.

That pressure will lead to more homelessness, as less private landlords enter the game, or increase their stock.

Maybe 1% win, (the first home buyer in the short term), and the other 99% of taxpayers all lose in the short to long term.

Is it worth the disruption?

The real issue is supply and demand, and I feel the above will lead to less private property development, not more.

[Panda-NZ-]

In my opinion, the latest govt housing policies may benefit a few new home buyers who are near to having their deposits to buy ready, if the policy works as intended, but at the expense of far greater numbers of rent payers who will face increased rent,

It will keep interest rates down for a longer period benefiting every mortgage holder. Plus lower NZD.

[Getty]

Please explain How so?

[Panda-NZ-]

RBNZ doesn't need to lift rates early OR increase capital requirements. House price increases create an economic risk we can do without.

[Bjauck]

I do not agree with that, or at least I think it is a more complex thing than is made out. Everything moves in value against everything else. Its problematic to talk about capital gains. You buy a house, at the end of 50 years it is still just a house and still worth one house (minus depreciation - that you can no longer deduct). It is arguably nonsense to say you have made a capital gain. If you borrowed all the money to buy the house and paid only interest then you could work out the "capital gain" as the difference in the dollar value of the home minus the interest paid (no longer deductible). If you paid in cash then there is no capital gain. Also if you lived in the house and didn't rent it out there would be no income with which to pay the tax on the nonexistent capital gain.

You work to earn income for food and shelter - in other words to stay alive - yet you are double taxed: Forst on that income and second with GST on food and services. Talk about an unfair burden?

Why should some asset owners be given an inflation allowance? Why not extend an inflation allowance to the owners of fixed interest investments too for the inflation component of their return?