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  1. #981
    Legend minimoke's Avatar
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  2. #982
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    Quote Originally Posted by minimoke View Post
    You may not accept it. But I think you are confusing "expense" with "Loss"

    Surely a person is entitled to do whatever they can to earn an income. If they have skills and time they can sell those to someone for a wage or salary. If they are prepared to take a risk to house some people in return for rent then surely good on them. Can you accept that sometimes expenses are incurred in generating an income? Why would you want people who earn less (income less expenses incurred in generating that income) to pay more tax than those who actually earn more.

    Given the apparent housing crisis shouldn't we be doing all we can to encourage people into property that can be rented to people?

    A loss is when expenses exceed revenue. I am not stupid.

    If you buy a rental property and it makes a loss of $10,000 per year simply because the rent you get could not cover your expenses. That $10,000 loss if added to your salary gives you a tax refund of $3300 assuming your marginal rate is 33c/$. Five years down the road you decide to sell as you find that the rent will never exceed expenses, which you knew anyway because of the big mortgage you took out when you bought. You walk away with some sort of capital gain which hopefully will cover what your losses were but the tax you didn't pay, $16,500, is a gift to you at the expense of all other tax payers. That is not acceptable.

  3. #983
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    Quote Originally Posted by 777 View Post
    A loss is when expenses exceed revenue. I am not stupid.

    If you buy a rental property and it makes a loss of $10,000 per year simply because the rent you get could not cover your expenses. That $10,000 loss if added to your salary gives you a tax refund of $3300 assuming your marginal rate is 33c/$. Five years down the road you decide to sell as you find that the rent will never exceed expenses, which you knew anyway because of the big mortgage you took out when you bought. You walk away with some sort of capital gain which hopefully will cover what your losses were but the tax you didn't pay, $16,500, is a gift to you at the expense of all other tax payers. That is not acceptable.
    Capital Gains tax should not be confused with Negative Gearing Tax. Two very different conversations. But if Jacina wants to bring in a new tax when she said she wouldn't, so be it.

    Edit. Is it acceptable for a person to keep the capital gain if they pay their Negative Gearing tax?
    Last edited by minimoke; 02-05-2018 at 01:17 PM.

  4. #984
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    Quote Originally Posted by minimoke View Post
    Capital Gains tax should not be confused with Negative Gearing Tax. Two very different conversations. But if Jacina wants to bring in a new tax when she said she wouldn't, so be it.

    Edit. Is it acceptable for a person to keep the capital gain if they pay their Negative Gearing tax?
    Well under the present system the answer is probably yes but capital gains tax is a whole new thing.I just presented it as to what actually happens now to show the effects of tax saved under negative gearing.

    Personally I am not in favour of a capital gains tax.

  5. #985
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    Quote Originally Posted by Vagabond47 View Post
    Then their packages get stopped at the border till the customer coughs up the GST and no doubt an extortionate processing fee. Can't see that being great for customer satisfaction. Or sent back if the importer (the customer) refuses to pay the GST as happened with the swedes when they put VAT on lower value packages.

    It'll be up to these companies whether they decide to collect the GST and pass it on, or simply to stop sending stuff to NZ customers if the hassle of dealing with customs or customers becomes too great. If they send enough to NZ it might be worth their while to setup online GST.
    The big players already have systems set up to apply sales tax, charge the buyer and remit to IRD. Australia's requirement starts in a couple of months so NZ will be a doddle next year.

    This government is beginning to add hassle, compliance and cost to vast swathes of the population. Most are small bites but after the first few people will be taking notice, even if the impact on their back pockets is not huge. Death by 10 or 12 cuts? Or should that be shower heads and light bulbs.

  6. #986
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    Quote Originally Posted by 777 View Post
    Simply I do not accept that a loss incurred on an investment in property should be deducted from a salary to give you a tax refund.
    What about a sole trader's investment in a start up business alongside other income? Need not be salary, could just as well be dividends. The investment could be any sort of capital expenditure including commercial property. Should that be treated differently to someone with a residential rental? If so, why?

  7. #987
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    Quote Originally Posted by artemis View Post
    What about a sole trader's investment in a start up business alongside other income? Need not be salary, could just as well be dividends. The investment could be any sort of capital expenditure including commercial property. Should that be treated differently to someone with a residential rental? If so, why?
    What about a service station that loses money on its workshop, but makes a buck on the forecourt? Or a thousand other examples where people derive income from different sources.

  8. #988
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    Quote Originally Posted by artemis View Post
    What about a sole trader's investment in a start up business alongside other income? Need not be salary, could just as well be dividends. The investment could be any sort of capital expenditure including commercial property. Should that be treated differently to someone with a residential rental? If so, why?
    No. It should be treated the same.

  9. #989
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    Quote Originally Posted by fungus pudding View Post
    What about a service station that loses money on its workshop, but makes a buck on the forecourt? Or a thousand other examples where people derive income from different sources.
    If they are different business's then no.

  10. #990
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    Quote Originally Posted by 777 View Post
    No. It should be treated the same.
    It won't be under the ring fencing proposal. It only applies to residential rental properties. Probable consequences -

    - owners will sell up before ring fencing comes in
    - the rental pool will shrink, maybe a lot, rents will go up, excellent tenants will be fine, others will swell the waiting list for emergency / state housing
    - the much discussed first home buyers will be no more able to buy than they are now, even if prices drop a bit
    - owners that stay in the market and run at a loss for the time being will minimise expenses, including deferring maintenance where they can
    - owners carrying a tax loss will not sell until they have used up the tax losses
    - the current government will get a windfall, future governments the liability.

    What did I miss?

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