Black Monday

[alokdhir]

It's just an unplanned ad hoc policy that hasn't been properly scrutinized. Its not supported by IRD or Treasury. It is a political decision based on the need to be doing something and the fact that property investors and landlords are a popular target. There is nothing good about it at all. The government should aim for consistent policy that is broadly fair and has been fully thought out.

So much said about Treasury's advise and IRD recommendations ....I dont think I need to add anything more .

Also to be fair to Govt they are phasing it out over next 4/5 years for existing investors ...I am sure that's time enough to sort out alternative arrangements . They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

[dabsman]

So much said about Treasury's advise and IRD recommendations ....I dont think I need to add anything more .

Also to be fair to Govt they are phasing it out over next 4/5 years for existing investors ...I am sure that's time enough to sort out alternative arrangements . They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

A socialist party not smart enough to have thought through all the ramifications. Next the greens will push for diesel to become non-deductable and our transport sector will be crippled. Then the conservative christians will push for water rates to be non-deductable in a brothel. Oh wait lets make fertilizer non-deductable as less grass means less food for poluting cows. Where does this end? There are only 3 exemptions I can think of in GST to keep it simple for everyone. This is a very concerning move by the CCP - I mean Labour. I cant make myself say government - maybe comrades?

[Biscuit]

......for me this is the first serious attempt of tackling this age old problem ...

What "age old problem"? That there is currently a relative shortage of housing supply? The "solution" does not address that problem. This is just a political game - redefine the problem you can't solve. Make it about landlords/investors (who are generally unpopular) and then publicly whack them. Labour party the hero to all the lazy, resentful gits who missed out on making money from property.

[Ferg]

They needed to start seriously from somewhere ...for me this is the first serious attempt of tackling this age old problem ...rest all did lip service

This is 100% bad policy, irrespective of one's political leanings. If I borrow to buy an income producing asset such as a building, a plane, machinery, or a fleet of buses etc. then the cost of borrowing those funds is quite rightly tax deductible. But to exclude a very particular class of asset (residential rental property) which is also an income producing asset is not only inconsistent policy but also incredibly lazy policy. Lazy in the sense that the Government has not clearly defined the problem or done any research, because the answer certainly wasn't to remove interest deductions or to extend the bright line test. Furthermore those who mislabel interest deductions with phrases such as "loophole", "tax break" or "tax advantage" are being disingenuous. The basic rule of thumb is that if you spend money to make money, then it is tax deductible. That is how it should continue to be, irrespective of the industry or asset class. The alternative is not worth pondering.

As for the need to push changes through under urgency; that shows a reactive Government thrashing around trying to find solutions, without actually doing any work. There is more depth in your average sidewalk puddle than the Labour front bench. The "age old" problem is actually a mismatch between demand and supply - the levers to which the Government actually control. Furthermore, successive Governments of the past 30+ years have washed their hands of social housing and pushed it into the private sector and then they have the audacity to say "yeah but not like that!". What were they expecting? Lastly, Government also control the levers to inflation, so to not have inflation adjusted capital gains is risible. As investors we now have to look out for unintended consequences and wonder if other classes of assets will also fall under the microscope. It is very tempting to go and live somewhere not run by a bunch of unthinking, spiteful and envious amateurs.

[McPussPuss]

Amusing to see the property investment class out in full voice having a grizzle after 12 months of outrageous capital gains and cheap credit, it is still not enough.

This govt, (love or loathe) originally campaigned and was elected on a housing affordability platform. Now after almost 4 years of diddly squat and soaring capital gains for investors they have finally made a move.

In my opinion the primary driver of the property market since the 80s is demand driven through credit availability, Interest rates in a one way direction. Borders are closed and prices up 25%?

Sure interest deductability may not now align with other business tax regulations but so what, it is targeted at property due to malinvestment and speculation creating an unsustainable distortion in the economy.

I dont know it if it the right move but it will temper overleverage and loss making property portfolios with a sole eye on capital gains.

As for rental supply decreasing, are these properties going to suddenly vaporise??

[arekaywhy]

...but sometimes Govts need to do things for the greater good ...like lockdowns were very bad for small business but they were right thing to do ...similarly trying to control rampant house prices thus creating sharp social tensions etc is the right thing to do ....

*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property?

[McPussPuss]

Yes, top of my list for getting out of the markets way would be scrapping of the accomodation subsidy.

My tax dollars subsidising landlords who already have preferential access to artificially (not free market interest rates) cheap credit in an already artificially supply constrained market.

[Aaron]

*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property?

Agreed starting with letting markets decide interest rates rather than having a central bank control them. That is probably the cause of the problem in the first place. We should all be upset that this is allowed to continue, landlords and renters alike.

[alokdhir]

Amusing to see the property investment class out in full voice having a grizzle after 12 months of outrageous capital gains and cheap credit, it is still not enough.

This govt, (love or loathe) originally campaigned and was elected on a housing affordability platform. Now after almost 4 years of diddly squat and soaring capital gains for investors they have finally made a move.

In my opinion the primary driver of the property market since the 80s is demand driven through credit availability, Interest rates in a one way direction. Borders are closed and prices up 25%?

Sure interest deductability may not now align with other business tax regulations but so what, it is targeted at property due to malinvestment and speculation creating an unsustainable distortion in the economy.

I dont know it if it the right move but it will temper overleverage and loss making property portfolios with a sole eye on capital gains.

As for rental supply decreasing, are these properties going to suddenly vaporise??

Thanks buddy for your support ..lol I thought I am the only one here supporting these bold moves of a very popular Govt . I totally agree with your thoughts ..if we have a supply side problem then controlling demand side is very justified .

Till real market forces can function fully till then trying to maximise benefit for most is perfectly right way to go for any democratically elected Govt .

Do I need to remind strong opponents of these policies that 2023 is before 2025 when interest deductions gets fully phased out ...Lets see what the public opinion in our democracy says ...after all we elect MPs to make laws for us . They are doing their job which they think is right ...if we dont like then we get our chance in 2023 .

National has already said they will reverse it immediately ...May gain 5% votes for that but will loose 10% for saying so ...IMHO

Social order and equal opportunities , having hope for future is the right of all not just few ...

We dont need deep divisions in our largely peaceful society ...I rather eat 2 bites in peace then tummy full in strife

[moka]

*snort* "right thing to do"

Here's another thought...how about not messing about with the market, getting out of people's way, and maybe making it such that there is an actual incentive to do something else other than property?

If you are providing incentives you are messing with the market. So something wrong with your logic.
Or is it only disincentives (changes that you disagree with) that are messing with the market?