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Have your say: Property Council warns tax reform would hit competitiveness
The Property Council of New Zealand (PCNZ), which represents commercial property investors, has warned that property tax reforms that could be unveiled by Prime Minister John Key at 2pm this afternoon could cut New Zealand's competitiveness.
I am in Wellington and will be liveblogging the Prime Minister's speech from Parliament from 2pm.
Property Council President Chris Gudgeon said more than 80% of commercial property was owned directly by businesses and an "ill-considered application" of tax changes would increase the cost of doing business in New Zealand.
Here's Gudgeon's full comments below:
"PCNZ would be hugely concerned if the Tax Working Group's recommendations for tax reform to deal with concerns in the residential property sector are extended to include commercial property owned or rented by businesses," Says Mr Gudgeon.
Mr Gudgeon and Property Council CEO Connal Townsend highlighted the findings of two independent reports by NZIER and KPMG into the recently announced Tax Working Group (TWG) proposals.
The reports, commissioned by Property Council, found that proposals based on changing depreciation rates and applying land taxes are the equivalent to raising taxes on the productive sector, with potentially significant effects on growth and economic performance by adding more damaging costs to doing business in New Zealand.
"While the Property Council supports the Tax Working Group's (TWG) call to reform the tax system to deliver revenue to government that won't damage growth prospects and is fair and sustainable, we don't think enough work has been carried out the current proposals for them to fit those criteria," says Mr Townsend.
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"Commercial property is the infrastructure of business and is fundamental to productivity, international competitiveness and growth. But more than 80% of commercial property is owned or occupied directly by business owners and the proposals around depreciation would be the equivalent of an effective rise in tax from 30% to 32%.
"That's at a time when at a time when government and the TWG have rightly identified that New Zealand needs to be reducing corporate tax rates to remain internationally competitive.
"The equivalent of a tax increase will also have an impact on our capital markets and our ability to attract and retain international capital. Further damage to the capital markets will be caused if tax rates for PIE 's and widely held superannuation funds, including Kiwisaver schemes, are increased above the current maximum of 30%".
"About 1.3 million New Zealanders have already invested in Kiwisaver and almost all of that investment is in PIE funds. Increasing investors' tax rates runs contrary to the objective of encouraging long term savings in the New Zealand sharemarket and providing for retirement.
Mr Townsend said the independent analyses by economic consultancy NZIER and tax experts KPMG show New Zealand businesses will bear the brunt of the costs from TWG proposals to reduce depreciation and impose a land tax.
"Unfortunately both proposals just become another impost on business in New Zealand. Every warehouse or factory owner, dairy farmer and wine producer faces an additional cost in producing export earnings for New Zealand.
"The TWG expects to raise around $1.3 billion from its depreciation proposals and the analysis shows about $1 billion of that will come from the commercial sector. We have major concerns about that additional cost to business but also in the model itself. Based on our collective industry knowledge, we believe there may be as little as a quarter of that figure available in potential revenue to the IRD depending on the figures used by the TWG. Clearly the numbers need further work."
While supportive of carefully considered reform that would be less damaging to the country's growth prospects Mr Townsend said Property Council could not support proposals that would make New Zealand an outlier among OECD tax regimes and damage international competitiveness.
"KPMG's survey of international research concludes that building structures, specifically commercial and industrial buildings, do depreciate and the same conclusion was reached by the Inland Revenue Department in a 2004 study.
"KPMG's analysis of the tax treatment of building depreciation in a global context indicates that New Zealand's current rules on building depreciation are the norm. The majority of our trading partners including Australia, Germany, Japan and the United States allow depreciation on non-residential buildings. Denying depreciation would impose an additional cost on NZ business making us less competitive and less attractive, particularly against our closest competitor Australia. Why would we introduce a policy that would reduce New Zealand's international competitiveness?" says Mr Townsend.
Mr Townsend said Land Taxes could be efficient at raising tax revenue but added New Zealand's history with land taxes was poor.
"To work they must be applied across the board but we had so many exemptions in the past that land taxes became ineffectual and were abolished in 1991. By that stage farms, recreational land, church and charitable groups were exempt and the burden fell on business. We would expect the same to happen again.
"Land taxes are basically the same as local government rates. The Independent Inquiry into Local Government Rates has already found that rates are unreasonable on business and here's a proposal to add further rating costs to business. That makes no sense."
My View
We'll all know exactly what John Key is proposing from 2pm today, but my understanding is that Key is unlikely to opt for a land tax, an increase in GST or a Capital Gains Tax. He is more likely to opt for a change to the rules around claiming depreciation on buildings, which would raise NZ$1.3 billion to help pay for a cut in the top personal income tax rate to match the trust rate at 33%.
The Property Council does have a point that most of this impost from removing depreciation on buildings as a taxable expense would hit commercial rather than residential properties.
That's why I think a land tax is a cleaner more efficient way to tax residential property investors, who are the ones who make losses in 2008 of NZ$2 billion on assets of NZ$213 billion, reducing tax revenues by NZ$150 million to NZ$200 million.
But it appears at this stage that the government will not take on property investors with a land tax. That's at a pity and would be a sign of leadership failure, if confirmed.
73 Comments
I need simple explanation: I
I need simple explanation: I am not a property investor nor a landlord. If I am a working person in a regular job and owned a side business, I am able to offset my salary income against the business, that's including depreciation, any losses and interest payments. If I ever sell the business, I can keep my capital gain (if any). So what is the diff between this and owning a rental property. So why Govt is gunning the property investors?
I think its to do
I think its to do with the idea that a property investment isnt directly creating jobs or products to export, whereas having a trading business or accounting part time business whatever has the likelihood of creating jobs and exports.
"But it appears at this
"But it appears at this stage that the government will not take on property investors with a land tax. That's at a pity and would be a sign of leadership failure, if confirmed."
So if JK doesnt do what BH wants its a sign of leadership failure ? Been reading too many of your own headlines Bernard ?
Fixing NZ requires a broad based approach - not just hammering the living daylights out of one particular sector.
Roll on 2pm.
Also that non-investors are subsidising
Also that non-investors are subsidising landlords via tax deductions. Any profits are only returned to the landlord. I'd rather be paying someone's dole
Gingerbreadman The answer is there
Gingerbreadman The answer is there is no difference.
@ goNZ "property investment isnt
@ goNZ
"property investment isnt directly creating jobs "
- wow... someone give me all that money back that I pay to lawnmowers, tradesmen, lawyers and accountants!
@ Jeff M
"Also that non-investors are subsidising landlords via tax deductions. Any profits are only returned to the landlord."
... just like any other business?
If there's no diifference then
If there's no diifference then I hope whatever they do in tax reform it must be seen to be consistence and fair to all. If they are aiming just a small group of people then they can kiss goodbye my vote. thanks for the replies
More walking wollocks. An “ill-considered
More walking wollocks.
An "ill-considered application" of tax changes might increase the cost of doing business in New Zealand, .............. but the relative reduction in cost of doing business outside of New Zealand would be worth the change, especially when considering the output of all the economy
Such wollocks.
Just hammering the living daylights out of one particular sector, ............. should lead to a much required webalancing of the economy, given the tradeable sector has been hammered because no one had the wollocks to make the obvious changes required earlier.
Again, such walking wollocks.
Go JK, don't walk wollocks, just use em' and lead. Be splwendid.
gingerbreadman The underlaying issue is
gingerbreadman The underlaying issue is there was a global housing booming from 2002 to 2007. Without this global housing booming, there would be no today's discussing.
Dunno, govt has a history
Dunno, govt has a history of favouring certain sectors over others. Not so much here (any more), but certainly overseas. E.g., farming subsidies, import tariffs, etc.
Govt uses tools to encourage investment in sectors it likes (e.g., R&D), so why not use them to discourage investment in sectors it thinks are over-done?
It is precisely about treating different sectors differently. I'm not particularly distressed by govt attempting to pick winners and losers, but I do think it is dishonest to be labelling changes as 'closing a loophole'.
@ Joe Blog: the housing
@ Joe Blog: the housing boom isn't just a NZ phenomena. It's a worldwide so we can't blame the investors.
"But it appears at this
"But it appears at this stage that the government will not take on property investors with a land tax. That's at a pity and would be a sign of leadership failure, if confirmed." BH, your headline keeps me coming back to your site.
Joe and Gingerbreadman the difference
Joe and Gingerbreadman the difference is that most businesses create wealth through producing a good or service that can be sold for profit which increases the wealth of the various stakeholders. These businesses are expected to make a profit (I think that the IRD would start looking at any manufacturing company quite hard if over 15 or 20 years all they did was make a loss), whereas property speculators and short term investors do not create anything but endless losses year after year which in effect rort $$ from hard working New Zealanders. How on earth can we abuse Bill and Hone for their perfectly legal rorts if we don't fix this issue and put some ethics and morality back into play.
Removing depreciation expense - fair
Removing depreciation expense - fair enough everyone knows house prices *always* go up in value!!
@Dave Smyth wow… someone give
@Dave Smyth
wow"¦ someone give me all that money back that I pay to lawnmowers, tradesmen, lawyers and accountants!
And if an owner occupier lived there they wouldn't use lawnmowers or tradsemen? I wouldn't be proud of paying lawyers and accoutants....
@ Sean: a fair comment
@ Sean: a fair comment
Sean, splwendidly said. Well won.
Sean, splwendidly said. Well won.
BH view "The Property Council
BH view
"The Property Council does have a point that most of this impost from removing depreciation on buildings as a taxable expense would hit commercial rather than residential properties."
Those who have seen the writing on the wall for a long time now, have had plenty of time to readjust...its not something out of the blue
If they have had their head in the sand, they should not be in the industry, thuff bickies
Post happening, the markets will re adjust over the months , those who should be in the business will still be, the cowboys will be gone, and life will go on...
Cut the bleating, its going to happen move on and life with it
All I want is at
All I want is at the end of the day is that fairness for all New Zealanders is in play. I don't mind paying reasonable taxes so that I can drive on good roads, turn up at the emmergency department if I needed and to and have a social safety net for those who really do neet some short term help. We are out of balance and the inbalances need to be addressed. We will always have fringe dwellers however when the fringe becomes the mainstream we can only end up in the cactus.
Footnote 1 of the NZIER
Footnote 1 of the NZIER report: "Our analysis looks at these policy suggestions in isolation and not in the context of potentially offsetting policies."
In other words, rather than considering it as a revenue neutral change to the tax system, they're assuming that we take a few hundred million out of the system, and launch it into the sun.
@ Steptoe (Steps) "Cut the
@ Steptoe (Steps) "Cut the bleating, its going to happen move on and life with it". Yep I suspect they will move on to the other shore where one can still claim depreciation - outflow of good monies.
Sean you are spot on
Sean you are spot on re the IRD...and short term investors. Im not sure why the IRD are not doing this with respect to their audit approach to residential property...the Income Tax Act 1994 clearly states a business "includes any profession, trade or undertaking carried on for pecuniary profit". If it is clear the thing is never going to make a profit then its not a business and any deduction should be disallowed.
The fact they have only recently brought a case against somebody living in their own LAQC, and have had limited success chasing those who have clearly purchased with the intention of resale suggest the problem is as much about the lack of enforcement of the current laws as it is about the need for new ones.
More from the NZIER report:
More from the NZIER report:
"A compilation of OECD country tax practices, summarised in Figures 1 and 2, show that New Zealand is [currently] similar to the OECD in the treatment of building tax depreciation. The real divergences appear to be in the absence of a capital gains tax, harmonisation of various tax rates and a higher value added tax."
By their rationale, if being divergent from the OCED norm is harmful to our competiitiveness, then we should have a CGT instead. Funny how this failed to make it into the press release.
Sean........ good for you!! Taxman..........
Sean........ good for you!!
Taxman.......... your nom de plume is a bit scary for the P.I.'s that stayed at the party toooooooo long.
Dave Smyth....... get up horsie...!.....come on....get up..!. or we will start flogging you again.!...... horsie..?.......oh no dead meat.
Mr Ng, splwendidly said. Well
Mr Ng, splwendidly said. Well won. No walking wollocks from you I see. Who commisioned and paid for the reports you are quoting?
Just my 2 cents -
Just my 2 cents - Why is a rise in property $$$'s always equated with a rise in VALUE? They are not the same. The fact is everything is LOSING VALUE very quickly, except land thanks to monetary depreciation. I understand that is a very simplistic and large generalisation. But it seems not to even factor in our language at times and it is a huge factor in the 'boom' of housing.
i suggest if the bank
i suggest if the bank sees my residential properties as commercial ( block of flats ) then if the new ideas that are to be released today are about more tax on only residential investors, i might argue i am a commercial investor, just ask my bank....
@ President of Property: that'd
@ President of Property: that'd be a weak argument - simple check on the council zoning will identify if your block of flats will be seen as commercial.
POP, sorry matey commercial/industrial/agricultural and
POP, sorry matey commercial/industrial/agricultural and mixed-use land use definitions will scuttle the idea. Check the title on your property - if you are a residential dwelling - you're nabbed.
that's all they are -
that's all they are - individual homes, imagine taxing a home.... more....
@Sean 9.32 I think it
@Sean 9.32
I think it was R Brierly created the anomoly, i.e. deductions allowed for the interest cost on borrowings to buy shares, shares did not have to return a dividend, he made taxable losses, shares were purchased as a long term investment, therefore taxable losses, tax free capital gain, One of those precedent cases taught Commercial law 101 in the 80's.
One of the defining facts was the ability for the shares to deliver taxable profits in the future.
If you pay GST on the rents its not residential
Many will be wabbed .......
Many will be wabbed ....... Landlord breaks likely top target (Yikes!)
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10624992&p...
Webermind, Mr Worsie, Mr Wing.
@ POP: Getting around the
@ POP: Getting around the issue of reclassifying your residential flats as commercial is exactly the tax avoidance scheme we have discussed in recent months. Activity like this sort gave all property investors a bad name. Shame on you..
I predict that this topic
I predict that this topic will get well over 200 posts and break records.
(If it's updated with the 2:30pm speech and not replaced by a new topic).
Glad someone has there head
Glad someone has there head screwed on the right way round.
Extend GST to financial services including interest, stop treating the sector as a holy cow. Crikey, we charge GST on bread.
I have started reading the TWG report, so far 8/10 for rational analysis, 0/10 for creative problem solving. What else would you expect from a bunch of academics, accountants and lawyers. Sad, sad, sad.
@ Sam_M "Govt uses tools
@ Sam_M "Govt uses tools to encourage investment in sectors it likes (e.g., R&D), so why not use them to discourage investment in sectors it thinks are over-done?"
Why not just let the market decide. If the Kiwisaver schemes and fund managers and NZX companies start providing better returns than property then mom and pop investors will quickly switch the way they allocate their wealth holdings. The NZX ('87) and the Finance companies ('07) burnt investors and thats why kiwis look to safe property to protect their wealth. A land tax will not change this. Decent returns from other asset classes will.
And who are these `economic terrorist` property investors? Home owners, small business owners, schools, churches, family bach owners and your aunt who owns a rental property.
If R&D needs encouragement then fix the R&D policy. Mom and pops have done well out of property to the chagrin and cost of the big end of town. This whole attack the property investors thing is simply special pleading by vested interests.
That's partly the problem with
That's partly the problem with NZ. Too many accountants, lawyers! we need more engineers, scientists.. (like Singapore)
We live in a democracy,
We live in a democracy, people are allowed to structure their affairs as they see fit, while we may not all agree, it is a persons right to structure their affairs with in the law.
Don't blame the people, blame the politicians, they create the environment that enables people to make decisions, I have head some people mention the immorality of what some people do, morality is wider than business transactions, don't even go there unless you are supremely confident in how you conduct yourself in all aspects of your life and tha we will also see your ations in the same light.
@ gingerbreadman shame on you...
@ gingerbreadman
shame on you... do not take things so literally, do not dare place me next to speculators or tax dodgers, i have and will forever do so, run an honest tax paying business...
i am just pointing out loop holes, where, as per usual our legal system will be the best money can buy, and there will be people like bees to a honey pot, changing their status or structures or buying their way into or out of a situation
i personally have no intention of doing so, particularly because those arguments you pointed out i used to get a residential loan with the aforementioned bank, however there will be those paying a commercial loan rate with some validity to an argument should they choose to do so...
gingerbreadman Says: @ Steptoe (Steps)
gingerbreadman Says:
@ Steptoe (Steps) "Cut the bleating, its going to happen move on and life with it". Yep I suspect they will move on to the other shore where one can still claim depreciation "“ outflow of good monies.
So what is the issue with that?
you saying they will not sell up, just abandon their assets?
or
they sell up and no one is going to buy...and even if they sell up and sell very low, they going to sell when it is not in their financial interest to do so?
And if they do move offshore so they can claim deprecation, they going to take their land and buildings with them?
Think beyond the edge of the desktop.
There are many comments about the non visionary, apathetic, winging nature of the Kiwi
Here we have the Property Council, within hours of announcement doing a last minute -ve bleat....knowing full well what is going to happen is going to happen.
Would they not serve their members etc far better by months ago saying
"OK guys this is the direction things are going, this is what members have to do to set up a stabilised business model...dont leave it for the last minute"
But no they do a last minute whine and think that is leadership.
<i>“A compilation of OECD country
"A compilation of OECD country tax practices, summarised in Figures 1 and 2, show that New Zealand is [currently] similar to the OECD in the treatment of building tax depreciation. The real divergences appear to be in the absence of a capital gains tax, harmonisation of various tax rates and a higher value added tax."
By their rationale, if being divergent from the OCED norm is harmful to our competiitiveness, then we should have a CGT instead. Funny how this failed to make it into the press release.
I have now read the report. The lack of CGT here is glaring, and logically allowing depreciation and catching it back up again through CGT is what our OECD co-members prefer. I can't help but feel that NZIER have pimped themselves out reading the report - its tone isn't even consistent with other NZIER comments I recall in the media.
I have sympathy though - I think commercial buildings do depreciate.
# Jeff M Says: February
# Jeff M Says:
February 9th, 2010 at 9:11 am
"Also that non-investors are subsidising landlords via tax deductions. Any profits are only returned to the landlord. I'd rather be paying someone's dole"
This is a common myth about property, that somehow your tax money ends up in investors pockets. The only tax investors can get refunded is tax they have already paid. Many people make losses on start-up businesses that can also be offset against any other income they have.
So cheer up Jeff M, you're not subsidising landlords and you are paying someone's dole.
All this talk of a
All this talk of a land tax raises a question.
It appears from what I have read that it is suggested that Land Tax would apply to all land (the exceptions suggested would of course mean Shania Twain would be safe!).
Thus it would be applied to the family home. If correct it would mean that as only 9% of people have second/rental investment properties the other 91% would be adversely affected. Surely one should deal with the problem areas without hammering the rest of the country.
Further a modest /small rate of Land Tax is of course a relative statement. 0.5% seems small but on the current Land Values and applied year on year with every chance of upward movement it is a recipe for electorial suicide.
There is talk of unifying the Trust/ Company/ Top Personal rate - but where is it written in stone/blood that they should come down why not set them at 38%.
Does this not also remove the incentive to play about with the vehicle to channel earnings/profits.
Steps. said............Here we have the
Steps. said............Here we have the Property Council, within hours of announcement doing a last minute -ve bleat"¦.knowing full well what is going to happen is going to happen.
Would they not serve their members etc far better by months ago saying
"OK guys this is the direction things are going, this is what members have to do to set up a stabilised business model"¦dont leave it for the last minute"
But no they do a last minute whine and think that is leadership.
Excellent observation Steps..... and probably just what the pollies and those in the know are doing right now......... but for the majority the bolt holes are closing rapidly.
A select few will survive this and create a new charter.... but it will be designed for maximum casualties.
Thats where the money is, just ask the trans-rail boys...er can't remember thier names!!
It will be business as
It will be business as usual. Just cosmetic changes to show for publicity.
@ POP: exactly! do not
@ POP: exactly! do not take things so literally
@ Sean "These businesses are
@ Sean
"These businesses are expected to make a profit (I think that the IRD would start looking at any manufacturing company quite hard if over 15 or 20 years all they did was make a loss)"
- A rental won't be making a loss after 15-20 years.
"whereas property speculators and short term investors do not create anything but endless losses year after year which in effect rort $$ from hard working New Zealanders"
- Sean, you're contradicting yourself. Short term speculators should be paying tax on their profits. If they don't they are breaking the law and should be prosecuted. This has nothing to do with long term investing.
@ Taxman
"And if an owner occupier lived there they wouldn't use lawnmowers or tradesmen? I wouldn't be proud of paying lawyers and accoutants."
- Actually no, as a landlord, I use paid services far more for rentals than on my own home because I can currently claim the expense. Without that deductibility, I'd do a lot more myself and the tradies would miss out.
Gosh..the rats on the sinking
Gosh..the rats on the sinking ship are tearing into each other..silly buggers should have been using the time to grow wings or plug the holes or convince the captain to change course.
- A rental won’t be
- A rental won't be making a loss after 15-20 years.
That depends - I reckon it might (5% yield, 7% interest on 100% geared, interest only, 3% rental growth = 15 years of tax refunds, and the first time the sum of tax paid is greater than the sum of tax losses claimed is over 35 years).
Oh look...the upper crust rats
Oh look...the upper crust rats must have used the time to glue a raft together and they are paddling to safety..smart lot those upper crust rats. Nice looking raft too..it came loaded with food and water, charts and oars. I can just make out the name on the back....Na..Nat...National Party..buggers are making aparty of it.
IanC - I'm guessing that
IanC - I'm guessing that would involve an interest only loan? With principal & interest (P&I) loans, the amount of interest you can claim drastically reduces over time - usually zero by year 25.
All my loans are P&I - I like my properties to be mortgage free eventually!
Why can't we just get
Why can't we just get rid of depreciation on everything. If you buy something and it loses value, tough s**t. Whether its property or business asset depreciation, if it takes an accountant to do it properly, its too complicated. Half the time book values have no relationship to real market value.
If you want to reduce income tax but still have a progressive tax system you have to tax the optional things that people spend more on as they get wealthier - property(land), luxury cars and overseas travel. A high earner with a modest lifestyle will do better, a high earner with a prolifigate lifestyle will do the same. Its personal choice.
@ IanC If yields are
@ IanC
If yields are 5% on day 1 when property purchased and property prices have doubled with yields on current purchase price is still 5%, the yield on the initial purchase price which loan is against is now 10%. Interest rates still around 7%. Taking the past 10 years you would be unlucky to be still making a loss on property if you purchased 10 years ago. What the future holds who knows.
This afternoon I can see
This afternoon I can see Kiwis will have to change the way they think about Our leaders.
We dont have a polly at the helm, we have PM with a CEO mentality, and on a mission.
Not to keep power but do what this country needs to have done to progress.
Lets Assume Key in on the right track....
Those, like any in a corporation who do there part to reach the vision will do well, Those who disagree but still do everything they can at the end will be pleasantly suprised....
Those industry and bureaucrats who disagree and dont do what they are meant to will be unemployed or broke.
On the other hand If Key is not on the right track....NZ with its health services, wins, tax structures, DoC, property, social engineeering...is stuffed anyway
So somethings may not be so good in the long run, others may take a sideways step, and others will actually help
Overall the potential to improve NZ will still make NZ a better place.
The best boss I ever worked for was like Key, back in the 70s (JB)
A project would come up and he would give instructions to each manager...
The number of times I directly questioned argued that it was impossible or stupid was a lot...
His answer was "I know the overall picture, you dont, if you cant do it, I will pay some else to do it"
EVERY time, as each dept did its , what seemed unrelated bit, the whole thing would come together like clockwork..was a pleasure to be part of it and watch.
EG
We have Principals , teachers unions jumping up and down....
But hey, they have a new CEO.... after 30yrs of them trying (trying is just that, very trying) to produce kids leaving school with qualifications that will get them into an apprentice ship the New CEO has said, enough is enough..this is how it is going to happen...you on board or not...not? ok we will replace your BoT.
5 /6yrs from now as these primary kids leave school, recession will be over and things starting to move ahead, and we have a pool of new capable apprentices.
Somewhere else Key will be setting up things so business can take on apprentices.
Property ppl who have and those who have now setup stable business practises , get on board will do well and add to the tax take, where as previously the industry in too many cases was a tax haven and sucking too much investment away from other productive areas.
So if you want to do well as a bureaucrat or business, do what this country needs, or get 'fired' and take your -ve attitudes to Aussie...good riddance.
"5 /6yrs from now as
"5 /6yrs from now as these primary kids leave school, recession will be over and things starting to move ahead"...really!...and there I was thinking that was about the time when the taxpayers would have to start with the paying down of the mountain of public debt. Or is it just going to go pooof in the night?. Nice thoughts Steps but reality points to a different outcome heading our way fast. Have a closer look at Greece.
"Extend GST to financial services
"Extend GST to financial services including interest, stop treating the sector as a holy cow. Crikey, we charge GST on bread. "
GSt on the interest component of your mortgage. that would go down with the average home owner. A 12.5% hike in their mortagae payments.
So what are you saying
So what are you saying Wally
its all doom and gloom, there is no hope, there is nothing or anything that can be done, so may as well give up emigrate to Haiti...or build a grass hut in some remote cnr of DoC land and hibernate?
We are dealt the cards that are given, and it is up to each individual to make the best of those cards....not just sit back at a keyboard bitch and moan, complain...but act it a positive manner
As my Grandmother always said
"no matter how bad things may seem, every cloud has a silver lining and count your blessings"
A lot of bloggers here
A lot of bloggers here need to take a step back from their self interest. Quite simply a small % of taxpayers paying all the tax is not sustainable.
Face the facts, the golden years of preferential tax treatments for rental properties are over. Move on.
"This is a common myth
"This is a common myth about property, that somehow your tax money ends up in investors pockets. The only tax investors can get refunded is tax they have already paid.
What you don't pay someone else has to. If you get a refund then someone else has to make up the difference.
This is what Key has been alluding to and where they are going to hit hard and fast.
People not paying their fair share of tax, but still expecting the services that come from it.
It is those who arrange their affairs to avoid tax or collect WFF, whether through trading trusts or tax losses from property that had better look out.
Its not on that whole streets in suburbs such as Browns bay collect WFF or that 9700 people collect WFF because they have losses on rental property or that a family collects WFF becvause they divert $150k of income through a trading trust.
@ Andy M: this is
@ Andy M: this is how revolution starts.. will you be saved ?????
Fair share is like common
Fair share is like common sense, its an oxymoron of a statement.
Go to bunnings, buy some wood, build a bridge and get over it!!
Step's said........We dont have a
Step's said........We dont have a polly at the helm, we have PM with a CEO mentality, and on a mission.
Hey hey!! thats my bloody drum your banging there Step me ol skip, part of my whole theory of little brothers part to play in the trading block...etc..etc.. still we will revisit that again...of that I am sure..
Lalalalalala dee dee ddee there's gonna be trouble yesireeeee.........bob
Get a grip Steps...lashing out
Get a grip Steps...lashing out at me because I point out the fact that English is borrowing us into a Greek crisis, will not stop English doing the borrowing will it. And no amount of wishful chat from granny will make the debt go away. The real world promises bugger all real growth for this economy for a long long time. That's not my bloody fault. The only answer is to look after number one. That is what those in govt have set out to do for decades. When they acted in a positive manner, they acted for themselves. They still do.
Is the future of rental
Is the future of rental properties to run them like any other business... positive cashflow inline with other businesses?
Will banks stop lending on the value alone, but also consider cashflow?
Personally, while I think this should happen, I can't seeing it happening - if this is the catalyst, I think it could be a bit light... If not hold on tight, this will be an action filled ride!!
Wally said............When they acted in
Wally said............When they acted in a positive manner, they acted for themselves. They still do.
Now that is statement you can take to the bank..........yup indeed it's just what we are.
Well here we go with
Well here we go with another episode in "having fun in the House" and wouldn't it be great if they could have jugglers and acrobats lead Lockwood in his slow plod to the 'throne'. Anything please to liven up what has become a tired show.
Christov Says: "Hey hey!! thats
Christov Says:
"Hey hey!! thats my bloody drum your banging there Step me ol skip,"
I was banging that drum before he even got elected m8...and since
Wally
"lashing out at me because ....."
Nothing personal m8. in fact I rather enjoy your posts.....but sometimes I do wonder If there is a +ve side to you outlook.....I agree your opinion of pollies, hide behind a political philosophy to feather their own careers, nest, and power too damn often.
Key I have seen in a different light...an ambition to go in the history books 100 yrs from now as a guy who turned this country around....yeah sure the Greece analogy is is certainly a valid point...at this piont in time, but I have a very gut feeling there is more behind the scences....no pain no gain, and Key has no intention of eventually going down the Greece route all the way.
@ Sam Smith "Will banks
@ Sam Smith
"Will banks stop lending on the value alone, but also consider cashflow?"
- They already do. Generally, they look for a minimum required disposable income after any additional expenses the owner may need to fund to prop up the rental.
@ Andy M
"People not paying their fair share of tax, but still expecting the services that come from it. "
- Considering that a minority of income earners pay the majority of the tax take, you're referring to most of the population.
I would say a GST
I would say a GST increase is coming to a place near you ?sorry Bernard i know you said it wouldnt happen.Also landlords will be socked.
GST 15% - there it
GST 15% - there it is
Something should be done to
Something should be done to stop property investors deliberately borrowing huge sums to buy property, then offsetting the costs of repaying these debts plus depreciation which does not occur, maintenance and any other costs against their other taxation on other income. Despite calling such changes unfair, no one else gets away with such big capital gains as results from this procedure.
@ Charles Digby "Despite calling
@ Charles Digby
"Despite calling such changes unfair, no one else gets away with such big capital gains as results from this procedure."
- Capital gains are not a result of tax deductions.
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