Labour govt 2020-23

[GTM 3442]

Is it a loophole? It was a deliberate design of the tax system to allow mortgage interest to be deducted for tax purposes. The term 'loophole' is of course a more politically expedient nomenclature for a government to use.

The"loophole" seems to be that you can deduct interest payments from income if you're an investor, but not for the family home.

Yes, it's nuts, but it is what it is.

The principle of taxing profit has just gone out the window.

From here it's government by expediency, taxation by inspiration, and a further step on the slippery slope.

Now - how about leveling the playing field by scrapping tax on interest earned?

[dobby41]

The"loophole" seems to be that you can deduct interest payments from income if you're an investor, but not for the family home.

Yes, it's nuts, but it is what it is.

The principle of taxing profit has just gone out the window.

From here it's government by expediency, taxation by inspiration, and a further step on the slippery slope.

Now - how about leveling the playing field by scrapping tax on interest earned?

Another way to have dealt with the supposed loophole would have been to allow a tax deduction for mortgages paid on a private home, I believe some countries do this.
Another way to have dealt with the 'too many investors pushing up prices' would have been to have limited the number of additional homes anyone could own.

[GTM 3442]

Another way to have dealt with the supposed loophole would have been to allow a tax deduction for mortgages paid on a private home, I believe some countries do this.
Another way to have dealt with the 'too many investors pushing up prices' would have been to have limited the number of additional homes anyone could own.

It's not actually a loophole.

It would have been much, much, better not to have done it.

Still, I suppose that New Zealand governments have a long proud record of ignoring principles.

[dobby41]

It's not actually a loophole.

It would have been much, much, better not to have done it.

Still, I suppose that New Zealand governments have a long proud record of ignoring principles.

That's why I said 'supposed' - just following others language. I fully understand that it isn't a loophole but a normal deduction in common with all other businesses.

[Balance]

That's why I said 'supposed' - just following others language. I fully understand that it isn't a loophole but a normal deduction in common with all other businesses.

Cynical Cindy attempting to frame the narrative to hide the fact that her government and her have broken election promises & undertakings.

Nasty & grubby woman.

[t.rexjr]

Ironically FHBs will fit the bill.

Rent's will increase to cover the additional tax expense, resulting in decreased ability to save for that first house.

Bare land prices will also increase as there's a loophole to avoid the tax if you build new...

Which increases land values in general...

Because the rental stock is now flowing toward new built houses landlords can now charge a premium... Which in turn increase market rental values of older houses...

Unfortunately because they aren't privy to builders terms on sections FHBs are now having to fork out more for the old s**tboxes while battling in an environment that increases the difficulty to save for a deposit in the first instance

[SBQ]

It's not actually a loophole.

It would have been much, much, better not to have done it.

Still, I suppose that New Zealand governments have a long proud record of ignoring principles.

I think it's a loop hole. ANY time you can deduct 1 source of income from an unrelated expense like mortgage interest is a loophole.

As for allowing mortgage interest expense to apply on the personal primary resident home? In the USA, there are limited on how much one can deduct this expense off their personal 'taxable income'. HOWEVER, like Australia & Canada, the USA has Capital Gains Tax on the sale of any home including their primary residence home. How is this fair in the NZ perspective when landlords after 5 years, can sell their asset (the house) for 100% tax free capital gain?

Again I applaud what Jacinda is doing. Ever since I came to NZ, it didn't seem fair how the majority of wealth in NZ has come from the backs of rising house prices. The term 'Negative Gearing' too was something I had to learn as it's never allowed in Canada and as I mentioned in other threads, the issue of leveraging is a problem.

Let me explain the distinction of other business ventures. When a company or small business closes up, ANY assets that have appreciated in value is taxed on the gain. Likewise with disposing depreciated assets like vehicles. The residual value too is taxed. On the asset side of the balance sheet, such as inventory is also taxed. So tell my why is it that an individual can own multiple homes rented out, can end up paying NO tax on the capital gain after 5 or 10 or 20 years??? Because this certainly is not the case in a small business.

But above all, here are the startling stats that got me off the chair in Jacinda's announcement:

1) by year end of 2020, 40% of ALL houses purchases was made by those who already owned multiple properties. (meaning, there's no way a 1st home buyer can compete. Buyers of houses for the sole purpose of renting out and investing will always pay more)


2) and from June to Nov 2020, the level of mortgage borrowing by these 'property investors' had increased by 116%. (no surprise here with record low mortgage rates, I saw as low as 2% last year)


3) From 1991 to 2019, NZ experienced the HIGHEST real growth of housing prices in the OECD !!! (Yes higher than places like Vancouver Canada and my friends are crying there)


4) Since last year, 15,000 houses were purchased by people who ALREADY owned 5 (FIVE) or more houses !!!



If you ask me, all these people owning multiple houses deserve it. They pushed up house prices so fast to unprecedented levels that any current gov't had to pull the levers.

and if you think the 'use' of house is complex in NZ. Look at Canada. If you rent a portion of your primary resident home out (ie basement, spare bedroom etc). Then the tax laws states THAT % proportion of the home is no longer counted towards tax free capital gain from that time onward. So people rent the whole basement out which can account to 50% of the proportion size of the home which means at time of sale in the long term future ; 50% of the capital gain becomes income taxable (off your principle resident home). What i'm saying is that the gov't of NZ has many options to do and can go down the path like Canada has done.

[Panda-NZ-]

Interesting contrast:

https://www.stuff.co.nz/national/pol...xisting-houses

National wanted to give 20k to 30k in taxpayer money for a first home ownership grant (!)

While this promise seems to have been kept:

Ardern took further aim at people with multiple properties, meanwhile, saying Labour would "remove speculators' unfair tax advantages."

[fungus pudding]

I think it's a loop hole. ANY time you can deduct 1 source of income from an unrelated expense like mortgage interest is a loophole.

Income tax is applied to profit on rental properties, just as any other enterprise. That is hardly a loophole. I think you've muddled your words. Applying income tax to the outgoings is loopy.

As for your claim that assets sold on the sale of a business are taxed on any gain, that is simply incorrect. Tax will only be applied to the depreciation recovered. Gains beyond that are normally tax free.

[jonu]

Income tax is applied to profit on rental properties, just as any other enterprise. That is hardly a loophole. I think you've muddled your words. Applying income tax to the outgoings is loopy.

As for your claim that assets sold on the sale of a business are taxed on any gain, that is simply incorrect. Tax will only be applied to the depreciation recovered. Gains beyond that are normally tax free.

Robertson has been disingenuous in the extreme, describing using interest payments as a loophole. This is a whole new tax on its own, aside from the Capital Gains 10 year brightline. Removing a business expense that applies to all other businesses is a new tax!

Three lies for the price of one from Labour. 1. No Capital Gains tax
2. No new taxes
3. No movement of the brightline test.