Housing Tax

[fungus pudding]

Really? Quote from "newsroom " article.

"Currently, regular 'Mum and Dad' investors know that leveraged investments in property are not subject to capital gains, unless they are in rental properties sold within two years of purchase. Given the doubling of house and land prices over the last 12 years and their ability to easily borrow to buy these assets, buying more property has been a no brainer. They know that investing their savings in a term deposit or an investment fund in the stock market would generate earnings that were taxed every year, either through withholding tax on interest or because income from buying and selling shares would be treated as income. They also can't borrow to invest in these assets. It's a simple choice that means households now have over $1 trillion invested in housing, while have just $163 billion in bank deposits and $56 billion in investment funds such as KiwiSaver."

westerly

Profit from rental income is taxable, just as dividend income is. Costs incurred in generating income does not form part of the profit (i.e they are deductible) The same rules apply to all income generating investments. It is incorrect to say they cannot borrow to invest in other assets.

[blackcap]

Profit from rental income is taxable, just as dividend income is. Costs incurred in generating income does not form part of the profit (i.e they are deductible) The same rules apply to all income generating investments. It is incorrect to say they cannot borrow to invest in other assets.

Correct. I borrowed $100k to buy a share investment post GFC. I can deduct the interest charges against my income, but I pay tax on dividends received. This investment is now worth $220k (yes equity markets have gone up a bit) and I have sold and pay no tax on the $120k gain. I do not see how the property market has advantages. Just a lot more costs.
I do the "accounting" for my partners rental portfolio. The returns even with the capital gains are pitiful compared with equities.