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Who'd want to be a landlord now ?
First major plant undermining this sector was several years ago when the Govt changed the rules to not allow depreciation on houses.
My view is this is fundamentally iniquitous as houses wear out gradually over their expected lifetime, (building code is houses are designed to last approx. 50 years so 2% depreciation as a minimum should be allowable.
This year we've now had ringfencing of looses so investors can no longer claim the loss against other income.
There have been many other changes including new standards for homes insulation to name just one other and of course we've seen the ever increasing risks of being a landlord through the widespread proliferation of methamphetamines but now this, a real "clanger" making it really hard to get rid of bad tenants.
https://www.msn.com/en-nz/money/home...cid=spartandhp
Very pleased not to be a landlord and I am not going there.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by Beagle
First major plant undermining this sector was several years ago when the Govt changed the rules to not allow depreciation on houses.
My view is this is fundamentally iniquitous as houses wear out gradually over their expected lifetime, (building code is houses are designed to last approx. 50 years so 2% depreciation as a minimum should be allowable.
This year we've now had ringfencing of looses so investors can no longer claim the loss against other income.
There have been many other changes including new standards for homes insulation to name just one other and of course we've seen the ever increasing risks of being a landlord through the widespread proliferation of methamphetamines but now this, a real "clanger" making it really hard to get rid of bad tenants.
https://www.msn.com/en-nz/money/home...cid=spartandhp
Very pleased not to be a landlord and I am not going there.
For sure, a lot more stressful than the share market IMO unless your fortunate enough to have exceptional long term tenants.
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Originally Posted by couta1
For sure, a lot more stressful than the share market IMO unless your fortunate enough to have exceptional long term tenants.
True story. I had a client who owned a lovely 4 bedroom brick and tile house in Warkworth and they had a lovely tenant that really looked after the place for just over 10 years.
One summer the rent stopped being paid and then the excuses started, one after another after another after another, very believable stories of hardship, serious illness and need within their extended family.
"Bill" was a trusting soul and based on their long track record he gave them a fair bit of latitude. Finally after a few months of stories he decided he had to do a property inspection.
She had become a P user and the place had turned into a bomb site. It took him another few months to get rid of the family and another few months and over $50,000 to clean and fix it up.
He's an old guy and simply couldn't handle the stress and he put it on the market after that. Never again were his words.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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Originally Posted by Beagle
First major plant undermining this sector was several years ago when the Govt changed the rules to not allow depreciation on houses.
My view is this is fundamentally iniquitous as houses wear out gradually over their expected lifetime, (building code is houses are designed to last approx. 50 years so 2% depreciation as a minimum should be allowable.
I agree that makes no sense - depreciation is a cost of earning income. Not allowing it as a cost may end up encouraging landlords not to own new buildings. When the house is sold that is when any recovered depreciation should be taxable.
This year we've now had ringfencing of looses so investors can no longer claim the loss against other income.
Making no taxable income and Reducing taxable other income by maximising leveraged untaxed capital gains was unfair too. Maybe investors should be given the option of treating as taxable the capital gain on the property if they want to claim annual losses against income from other sources?
There have been many other changes including new standards for homes insulation to name just one other
I don't know the specifics of the insulation requirements. However I am all for First World well-insulated homes for all in NZ. It would also help reduce the public cost of health treatment for many childhood illnesses amongst other benefits.
of course we've seen the ever increasing risks of being a landlord through the widespread proliferation of methamphetamines but now this, a real "clanger" making it really hard to get rid of bad tenants.
https://www.msn.com/en-nz/money/home...cid=spartandhp
Very pleased not to be a landlord and I am not going there.
Likewise for me. It must be nightmare for many Landlords. Private landlords should not be responsible for housing bad tenants.
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Only got one tenant and thats 'PGG Wrightsons' ... stuff the Res rental market at these low yield levels..far to many extra costs and hassles and if the Cap Gain is going be flat for next so many years why would you bother
"With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu
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Originally Posted by JBmurc
Only got one tenant and thats 'PGG Wrightsons' ... stuff the Res rental market at these low yield levels..far to many extra costs and hassles and if the Cap Gain is going be flat for next so many years why would you bother
Yep. I gave up residential in the mid 80s. Best thing I ever did, and it's got a lot tougher now. Commercial/industrial is a cake-walk in comparison
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Originally Posted by Bjauck
..... Maybe investors should be given the option of treating as taxable the capital gain on the property if they want to claim annual losses against income from other sources?.....
Just for residential rentals or all assets?
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Originally Posted by artemis
Just for residential rentals or all assets?
I guess There is always the risk that if you allow losses to be deducted from income from other sources that you end up giving a subsidy to a bad investment yielding neither a capital gain nor any net income. That would be an inefficient deployment of capital.
Last edited by Bjauck; 19-11-2019 at 09:33 AM.
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Originally Posted by Bjauck
I guess There is always the risk that if you allow losses to be deducted from income from other sources that you end up giving a subsidy to a bad investment yielding neither a capital gain nor any net income. That would be an inefficient deployment of capital.
What say time passes and income increases? Say for a small tradie business where tools and a couple of vans are secured against the family home. Starts small, builds clients and income. They can still offset losses against other income. It's just residential rentals that are now not allowed to.
Rentals usually turn cash flow positive after a few years. Ring fencing rental losses just defers offsets until then. Again, timing.
Meantime, owners will make decisions in their best interests. Like essential maintenance only for example, and decent rent increases.
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Originally Posted by artemis
What say time passes and income increases? Say for a small tradie business where tools and a couple of vans are secured against the family home. Starts small, builds clients and income. They can still offset losses against other income. It's just residential rentals that are now not allowed to.
Rentals usually turn cash flow positive after a few years. Ring fencing rental losses just defers offsets until then. Again, timing.
Meantime, owners will make decisions in their best interests. Like essential maintenance only for example, and decent rent increases.
I guess tradie businesses don't make the Kiwi dream of owner-occupier home ownership unaffordable for so many families? It is more of a political hot potato perhaps.
Perhaps some rental owners always have a high percentage mortgage so that that their rental properties seldom turn a net profit, whilst racking up leveraged capital gains? Maybe the ring fencing is aiming at that scenario.
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