What change will we see to property taxation?

[Billy Boy]

Which would fly in the face of normal business accounting. That is taxing some poor sod on moeney he hasn't earned, or may not have.

Yes But......
The problem is overall, so much money is going into property. The banks are borrowing, etc etc
The problem or result the Gumment wants is.... less $$$ into property and more into other
investments like shares, fixed, etc
BB

[minimoke]

Yes But......
The problem or result the Gumment wants is.... less $$$ into property and more into other
investments like shares,.....
BB

Shares - now theres a good idea. Drive investors into the wilder west that is our share market. Take ALF. One minute you have the NZX letting its prefered people know ahead of the dums and mads that they are going to enter the Index. Result - a big increase in SP. Shame ALF didn't let the market know as well. Then what happens NZX reverses its decison a few days later. And why is ALF going to get into an Index - because a Finance Company stuffed up so the D and M's run the risk of loosing all their money or just some of their money.


Its that sort of thing that steers people away from shares.

[Billy Boy]

Shares - now theres a good idea. Drive investors into the wilder west that is our share market. Take ALF. One minute you have the NZX letting its prefered people know ahead of the dums and mads that they are going to enter the Index. Result - a big increase in SP. Shame ALF didn't let the market know as well. Then what happens NZX reverses its decison a few days later. And why is ALF going to get into an Index - because a Finance Company stuffed up so the D and M's run the risk of loosing all their money or just some of their money.


Its that sort of thing that steers people away from shares.

Behave yourself MM.... You know very well what I'm saying, in general.
I dont really have to spell it out do I ??
BB

[minimoke]

Behave yourself MM.... You know very well what I'm saying, in general.
I dont really have to spell it out do I ??
BB

Apologies - it must be the sun getting too me. Thats the second day this summer we've seen some. As an aside could I interest you in a rock solid super scheme to put your money into rather than property. Its got a leading politician; an ex Party Leader and Gumint Minister running it- thats probably what the Gumints looking at!

[Billy Boy]

Apologies - it must be the sun getting too me. Thats the second day this summer we've seen some. As an aside could I interest you in a rock solid super scheme to put your money into rather than property. Its got a leading politician; an ex Party Leader and Gumint Minister running it- thats probably what the Gumints looking at!

Well I suppoze I tried !!!

[Steve]

The NZ issue with LAQC's & property seems to be similar to the US issue with Limited Partnerships & property back in the '80s.

"Limited partnerships were generally tax motivated. So the Tax Reform Act of 1986, which devastated real estate, was a big factor in running the industry “out of town.”"

Will any changes to the LAQC/property system in NZ have the same effect as what happened in the US? I guess that we will know for sure in a couple of months...

[Steve]

It appears that Martin Hawes shares my thoughts:

Martin Hawes: Depreciation loses lustre
Property investors will rail against the elimination of deductible depreciation but in the long term it may turn out to be a good thing.

Investment 101 says tax should never be a reason for an investment because the rules can change. When depreciation on property is abolished, investors will have to look at the real numbers behind their investments (especially rental yields), not the fake temporary ones that have been produced by tax refunds. That ought to make them more astute investors.

The real problem with residential property is that it is not a good investment - rental income is too low. A tax refund from depreciation may mask that problem, but does not turn a poor investment into a good one.

[Arbitrage]

Martin Hawes bases his investment decisions on yield. So a rental income of 3-5% is not enough for him to judge it as a good investment. However, cash flow (ie weekly or fortnightly rent rather than an annual or six monthly dividend), capital gain and tax issues are also a part of a property investors value calculations. The fact that a dodgy director hiding behind a family trust, cannot take your money is also a consideration.

[limegreen]

Interesting to see that Ring Fencing has popped up again a few times in the past few days, as forecasts show that removing depreciation won't provide enough additional tax (because the original forecasts didn't seem to include depreciation clawback on sale of the property). Interestingly, as I was having a bit of a look at this, I note that losses were ring fenced until removed by previous National Govt in 1991.

[Steve]

Yip, it looks like they are serious about plugging the leaks...

English signals tax crackdown
Finance Minister Bill English is signalling a crackdown on high income households that lower their tax bill by diverting income through companies or claiming property tax losses.

Mr English said the May 20 Budget would close these loopholes.