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  1. #1
    ShareTrader Legend Beagle's Avatar
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    Default 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.
    No butts, hold no mutts, (unless they're the furry variety).

  2. #2
    Trying to get outta here
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    Quote Originally Posted by Beagle View Post
    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.

  3. #3
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by couta1 View Post
    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.
    No butts, hold no mutts, (unless they're the furry variety).

  4. #4
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    Quote Originally Posted by Beagle View Post
    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.

  5. #5
    FEAR n GREED JBmurc's Avatar
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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
    People don't have ideas, ideas have people

  6. #6
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    Quote Originally Posted by JBmurc View Post
    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

  7. #7
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    Quote Originally Posted by Bjauck View Post
    ..... 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?

  8. #8
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    Quote Originally Posted by artemis View Post
    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.

  9. #9
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    Quote Originally Posted by Bjauck View Post
    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.

  10. #10
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    Quote Originally Posted by artemis View Post
    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.

  11. #11
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    Quote Originally Posted by Bjauck View Post
    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.
    Being renter myself, I can tell you the insulation requirements are just a big joke. Only floor and ceiling has to be insulated and that only in case it's actually accessible to be insulated. In my situation the insulation is a 3cm styrofoam with about 0.5cm gaps in between the tiles. You can imagine this kind of insulation does exactly nothing to keep the house warm. This was approved as okay by 2 different insulation companies...

    Coming from Europe I can tell you all the houses have floor/roof/walls full on insulation with probably 10cm+ rockwool airtight insulation. NZ houses are generally garbage quality and this is one of the reasons I decided not to invest into property. Other reasons are the quality of renters is pretty poor, Auckland properties are overpriced and government obviously guns for property investors.

  12. #12
    ShareTrader Legend Beagle's Avatar
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    No butts, hold no mutts, (unless they're the furry variety).

  13. #13
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    Quote Originally Posted by Bjauck View Post
    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.
    The mortgage is irrelevant. It's the interest on the borrowings that are deductible. e.g. You can borrow on your own property and own a rental mortgage free, but still deduct the interest paid to calculate profit.

  14. #14
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    Quote Originally Posted by fungus pudding View Post
    The mortgage is irrelevant. It's the interest on the borrowings that are deductible. e.g. You can borrow on your own property and own a rental mortgage free, but still deduct the interest paid to calculate profit.
    Well of course if you borrow on your other assets to purchase another property then the size of the financing mortgage is still relevant. The size of the mortgage/loan is relevant. A bigger mortgage means a larger amount of interest chargeable thereon becomes deductible.

    Either way, it helps inflate the property market.

  15. #15
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    Quote Originally Posted by peetter View Post
    Being renter myself, I can tell you the insulation requirements are just a big joke. Only floor and ceiling has to be insulated and that only in case it's actually accessible to be insulated. In my situation the insulation is a 3cm styrofoam with about 0.5cm gaps in between the tiles. You can imagine this kind of insulation does exactly nothing to keep the house warm. This was approved as okay by 2 different insulation companies...

    Coming from Europe I can tell you all the houses have floor/roof/walls full on insulation with probably 10cm+ rockwool airtight insulation. NZ houses are generally garbage quality and this is one of the reasons I decided not to invest into property. Other reasons are the quality of renters is pretty poor, Auckland properties are overpriced and government obviously guns for property investors.
    Traditionally the Goal for Kiwis is to own property as it is the best way to invest your money and get a secure abode for your family.

    In the 1990's I was in Ireland for a while and the fairly average terrace I lived in was so much warmer and drier in the Colder and damp Winter than the (reasonably upmarket and supposedly-insulated mid-1970's) house my parents owned was in Auckland's milder and damp Winter.

    Maybe the original insulation standards were developed back in the day when UK houses were actually damper and colder and NZ's milder climate made the houses seem warmer in comparison. I wonder if the North Island had a colder climate whether the NZ insulation requirements would be more exacting. Maybe if Aucklanders had to shiver for longer in Winter, standards would be tougher?
    Last edited by Bjauck; 19-11-2019 at 04:14 PM.

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