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Are mum and dad investors a business in that sense of the word? I'd say no.
I am in the unethical position of having to join in nowMungoMan wrote: ↑Tue Mar 23, 2021 12:07 pm
But so what. This is the internet!
I utterly agree re the role of the rental market, noting in passing the salient fact that rent-seeking is the usual term for increasing wealth without a concomitant increase in productivity. The fact the NZ government is doing anything at all is heartening.
I hope, but do not anticipate, that an Australian national government might follow suit sometime between now and the closing down sale for the universe.
I agree with perhaps 1 exemption.
I agree with you on one level, but on the other, is it not a business that doesn't pay tax on the appreciation (profit) of the asset? However, what more often happens to that appreciation, is it is used as collateral to support further borrowing at inflated prices. It's no skin off the professional landlord's nose because a) he can put the rent up to cover the cost(no controls here like in other countries) and b) he/she knows it's going to appreciate more because he/she has just taken another housing unit off the market resulting in c) a grossly inflated housing market taken out of reach from 1st home buys and even 2nd home buyers caught in limbo between properties, which d) results in these people trapped in a rental market that is also grossly inflated.booji boy wrote: ↑Wed Mar 24, 2021 1:44 amWell the common practice that was happening 10-15 years ago when interest rates were much higher and before the Govt clamped down on it was that you would have a loss making rental property where you are paying out say $30k in interest costs (ignoring other outgoings) and only getting $20k rental so you are making a $10k loss. The owners of the property top up the mortgage payments from their own pocket and offset the $10k loss against their personal salary/ wages and get a nice little $3,300 tax refund. That was a bit of a wrought and the Govt addressed this by 'ring fencing' those rental losses so you can't offset the $10k loss against your personal income. Instead you carry the rental losses forward until you are eventually making a profit and offsetting the loss against future profits. If the house is sold in the meantime those rental losses are forfeited.Ted. wrote: ↑Wed Mar 24, 2021 12:55 amAgree with the first part of your post.Monkey Magic wrote: ↑Wed Mar 24, 2021 12:19 am Extending the brightline test I think makes sense, the only slight tweak I would make to that is to extend it further but have a sliding tax rate on it, the longer you own it the less you get stung. If you have it for 30 years you're not stung with a 39% tax, either the proviso it stays tenanted and it passes a rental wof.
The lack of tax deductions, I can only see this hiking up rents. Especially for landlords who had been happy to leave rent as is for years while the mortgage was covered, they will now have to hike to cover the tax bill
I'm not so sure of the second but am happy to be convinced otherwise. For instance, are landlords who have not and will not regularly increase rents a significant part of the sector?
Also, can someone explain why are the soon to be expired tax deductions commonly viewed as a loophole or an anomaly if they are usual practice in residential rental markets. Are the tax deductions generally considered equitable or inequitable, or are they merely a economy skewing bonus?
That was the wrought that many were aggrieved about but I believe the Govt had successfully negated that.
But for a full time landlord who has no other income and is legitimately in the business of renting residential properties to paying tenants it seems absurd that interest on borrowings is non deductible. It's a cash cost to the business.
In the example above if you reversed the numbers and were making a $10k profit you would currently pay $3,300 in tax. Remove the interest and you are now taxed on the full $30k rent and you're paying $9,900 in tax plus $20k in interest.
It also commoditises private property across the board, as opposed to just business assets or tools.Enzedder wrote: ↑Wed Mar 24, 2021 4:48 amI agree with perhaps 1 exemption.
My daughter used to own a rental (with her ex) and they had virtually a 100% loan on an interest only basis for the rental.
Meanwhile, their residence (which was also used for extra security on the rental) they put as much as they could into principal reductions as that interest was not deductible.
Perhaps a limit on the level of interest that can apply (say 2/3rds of purchase price) would stop that tax avoidance scheme.
Well yeah that is part of the rort that the Govt has largely clamped down on but in the case of your daughter that is the way any smart accountant would advise them to structure it.Enzedder wrote: ↑Wed Mar 24, 2021 4:48 amI agree with perhaps 1 exemption.
My daughter used to own a rental (with her ex) and they had virtually a 100% loan on an interest only basis for the rental.
Meanwhile, their residence (which was also used for extra security on the rental) they put as much as they could into principal reductions as that interest was not deductible.
Perhaps a limit on the level of interest that can apply (say 2/3rds of purchase price) would stop that tax avoidance scheme.
On this we agree,Dark wrote: ↑Wed Mar 24, 2021 6:35 am Mallard is a complete arsehole.
And should be gone burger
https://player.vimeo.com/video/528110700
I support her, and voted Labour (surprise, surprise) and think he's a completely narcissistic twunt and should be out on his arse, a prick of the highest order!booji boy wrote: ↑Wed Mar 24, 2021 7:09 am Of course I'm not Jacinda's biggest fan to start with but to me it is just a really bad look that she refuses to do anything about Mallard.
Interested to hear the views of those that support Jacinda. I'd like to think that if I did support Jacinda I would be really disappointed in her handling of this.
So are you disappointed that Jacinda hasn't taken decisive action and thrown him out? Instead she defends him?Wignu wrote: ↑Wed Mar 24, 2021 7:58 amI support her, and voted Labour (surprise, surprise) and think he's a completely narcissistic twunt and should be out on his arse, a prick of the highest order!booji boy wrote: ↑Wed Mar 24, 2021 7:09 am Of course I'm not Jacinda's biggest fan to start with but to me it is just a really bad look that she refuses to do anything about Mallard.
Interested to hear the views of those that support Jacinda. I'd like to think that if I did support Jacinda I would be really disappointed in her handling of this.
There is only a limited supply of housing because people buy houses and don’t bother putting any tenants in there. Tax the fark out of those people. I would love to know how many empty houses there are across the country, all this talk of having to build shitloads of new houses is ignoring the real issue of investors buying houses purely for capital gain.Fat Old Git wrote: ↑Tue Mar 23, 2021 6:57 am That's a nice idea in theory, but unfortunately doesn't match reality. Rents would have to be a lot larger than they currently are for that to be the case, and would need to cover paying contractors to do all of the unpaid labour that landlords often put into maintaining and managing their properties.
Treating landlords as if the the main source of the housing crisis might deliver nice feel good sticking to the "rich pricks" emotional release, but it will do little to address the main causes of the crisis (a limited supply of housing), and may end up having a large negative impact on those we're hoping to help.
There's one on my street that's been empty for over two years. Shameful.look_spanky wrote: ↑Wed Mar 24, 2021 10:23 amThere is only a limited supply of housing because people buy houses and don’t bother putting any tenants in there. Tax the fark out of those people. I would love to know how many empty houses there are across the country, all this talk of having to build shitloads of new houses is ignoring the real issue of investors buying houses purely for capital gain.Fat Old Git wrote: ↑Tue Mar 23, 2021 6:57 am That's a nice idea in theory, but unfortunately doesn't match reality. Rents would have to be a lot larger than they currently are for that to be the case, and would need to cover paying contractors to do all of the unpaid labour that landlords often put into maintaining and managing their properties.
Treating landlords as if the the main source of the housing crisis might deliver nice feel good sticking to the "rich pricks" emotional release, but it will do little to address the main causes of the crisis (a limited supply of housing), and may end up having a large negative impact on those we're hoping to help.
I wouldn't sell a house tenanted. I would end the tenancy and sell.Fat Old Git wrote: ↑Wed Mar 24, 2021 7:07 pm Does a landlord selling a rental property actually free up the property for a first home buyer though? I have a feeling that if it is tenanted when you sell it you have to sell it as a tenanted property so all you are doing is changing the landlord.
It was something we looked into when we had a very difficult dishonest tenant who was causing us a huge amount of stress. And I'm pretty sure that was the info we were given. And since then it's become even harder to remove a tenant.
I wouldn't be quite that drastic Jeff but what I would propose is that there is a limit on the number of properties that you can own, say 3-5, before you become classified as a 'Professionsl Investor' for tax purposes and there is a capital gains tax on the properties you own other than your family home.Jeff the Bear wrote: ↑Wed Mar 24, 2021 9:26 pm I've mentioned it before on this here bored, but in relation to the UK housing market, but can some bright spark who knows more about economics/housing market tell me why my "What I'd Change If I was Supreme Leader for the Day" idea for the housing market wouldn't work...and that is, why not legislate that everyone is only allowed to own two properties (one home, and one rental).
To make sure you don't shit the market in the short term, you could put a 15 year moratorium on selling (although, obviously, people with multiple homes will probably spread their sales over hat period). Would put an immediate damper on the house prices, and the steady trickle of sales throughout that 15 years would continue to keep them down.
Yes very, but not surprised either.booji boy wrote: ↑Wed Mar 24, 2021 9:50 amSo are you disappointed that Jacinda hasn't taken decisive action and thrown him out? Instead she defends him?Wignu wrote: ↑Wed Mar 24, 2021 7:58 amI support her, and voted Labour (surprise, surprise) and think he's a completely narcissistic twunt and should be out on his arse, a prick of the highest order!booji boy wrote: ↑Wed Mar 24, 2021 7:09 am Of course I'm not Jacinda's biggest fan to start with but to me it is just a really bad look that she refuses to do anything about Mallard.
Interested to hear the views of those that support Jacinda. I'd like to think that if I did support Jacinda I would be really disappointed in her handling of this.
That says more about you than her to be honest.
Well one is your family home, you know, where you live. The other is a family bach, you know where you go for holidays as a family if you're lucky enough to be able to afford it. Now remember each of these is paid for from salary and wages that you paid tax on. Neither is funded by tenants. You, you know, worked hard, saved, invested your money carefully and wisely and you're lucky enough to enjoy some of the fruits of your labour.Wignu wrote: ↑Thu Mar 25, 2021 2:56 amThat says more about you than her to be honest.
Explain to me why mum and Dad would need 3 - 5 properties to retire? Answer is they don't, in reality don't even need one, a single freehold house would generally be enough especially if you've been able to save for a super scheme whether it be Kiwisaver or anything else.
I see there's some poor prick moaning in a NZ Herald article, can't read it as paywalled, that he's going to get charged an extra $16k over his 12 properties ... boo fvcking hoo, he's been making hay while the sun shines over the last few years with cheap interest rates, wonder if he passed those on to his tenants?
I haven't claimed they're hard done by, and although it would be easy to claim they are given the amount of scapegoating that is coming their way. I've merely explained why the comment by the greens MP is misleading at best, and why rental rates have increased despite low interest rates.guy smiley wrote: ↑Thu Mar 25, 2021 3:17 amPerhaps, if that is the case for all those hard done by landlords, they are over extended and should look to off load some risk.Fat Old Git wrote: ↑Thu Mar 25, 2021 2:52 am Iirc, from figures reported recently, around 80 of landlords only have one rental property.
Also, the claim about landlords finding "excuses" the raise the rents despite low mortgage rates is misleading at best.
Many landlords will be serving larger mortgages than they may have in the past, as they too have to pay market rates for any new properties. Not everyone has a rental they purchased 30 years ago.
And other costs such as rates and insurances have been increasing yearly at significantly more than the rate of inflation.
I can imagine the content of some of the emails and other communications doing the rounds from the various investor advice bodies and the like... the outrage must be considerable. I'd make a small wager that it would heavily support the raising of rents... in part because that would supposedly apply political pressure on the government.
I reckon a solution to this considerable problem would be regulatory rent caps.
Imagine the howls then...?
In the 2018 census there were just under 200,000 empty houses NZ wide, around 40,000 of those in Auckland. Id hesitate to say that would be closer to 250,000 empty houses in 2021. In perspective London a city of over 9 million has 25,000 empty homes.look_spanky wrote: ↑Wed Mar 24, 2021 10:23 am There is only a limited supply of housing because people buy houses and don’t bother putting any tenants in there. Tax the fark out of those people. I would love to know how many empty houses there are across the country, all this talk of having to build shitloads of new houses is ignoring the real issue of investors buying houses purely for capital gain.
Wow, I had no idea there were that many empty houses. I'm beginning to see some better possibilities of solving the housing crisis than what is currently being offered.JPNZ wrote: ↑Thu Mar 25, 2021 4:32 amIn the 2018 census there were just under 200,000 empty houses NZ wide, around 40,000 of those in Auckland. Id hesitate to say that would be closer to 250,000 empty houses in 2021.look_spanky wrote: ↑Wed Mar 24, 2021 10:23 am There is only a limited supply of housing because people buy houses and don’t bother putting any tenants in there. Tax the fark out of those people. I would love to know how many empty houses there are across the country, all this talk of having to build shitloads of new houses is ignoring the real issue of investors buying houses purely for capital gain.
I know for a fact there are plenty of Auckland investors with 5+ houses that don't even bother with Tenants in them because the capital gains outweigh the cost of renting it out (property management, potential damages, general upkeep and replacement)
I don't think supply is the main issue, if all those empty houses were sold or rented the problem would go away overnight.
In 2018, the Minister of Housing and Urban Development Phil Twyford ruled out an empty homes tax. Last year, its Tax Working Group report stopped short of recommending one. The TWG suggested local councils, rather than the central government, should decide. The report pointed to "international examples that could inform the development of similar taxes in New Zealand".
Vancouver, Canada, is one such trailblazer. Legislators in the city have forced landlords to rent out their property or pay a 1 per cent tax based on the home's assessed value.
The levy, introduced in 2017, collected $39.4 million from 1989 empty properties in 2018. Vancouver reinvests the cash into affordable housing initiatives and recently voted to raise the tax to 1.25 per cent.
Woods said the Government remained unconvinced about the merits of an empty homes tax. Last year, a Productivity Commission said a similar vacant land tax would only have a "small and transitory" effect.
