Wally's probably right.

http://www.nbr.co.nz/article/no-easing-mortgagee-sales-predicted-116830

No easing of mortgagee sales predicted
NZPA | Sunday December 20 2009 - 11:21am

The number of people losing their homes to a mortgagee sale may have dipped according to the most recent data but numbers are still expected to remain high into the New Year. ...

Andrew, any tips for opening a Bank Account in AU? I see with Rabobank in AU you need a AU TFN tax file number etc

any hints on easiest way to open an AU account from NZ?

nathan...why not buy aussie shares mate?

@markH ~ all: Is it ppl losing their homes or "landlords"? I thought the comments I saw suggesting the banks were foreclosing on non-home occupiers (mostly).

@Wally: Indeed rates are low, foreclosures I assume right now are (mostly) due to job losses...or landlords not being able to get enough rent to cover the costs...so, yes double the rates and we will see accelerating losses, but I still think you are too early with hyper-inflation/15%+ rates....everything I see/read suggests deflation or minor inflation for 2010 and probably 2011....

@AndrewJ: Bollard can keep rates low for as long as inflation is <3%....also as many ppl are floating so he doesnt have to plan as far ahead as he used to. So raising should have more of an immediate effect when it does come, so he can wait longer than in the past (I wonder if the commentators/bank economists see it as he sees it, I think the RB does a better job than them). I take from the last RB comments that he doesnt see a need for 6 months, indeed if oil continues to drop (and it has for the last two months) plus we see another double dip recession he may hold off a long time....So the budget is in May? Bollard has said nothing til June and he said that depends (how far and for how long) on Govn fiscal prudence so a genuinely tight budget might make him hold out, a to lose budget and a june rise looks likely.

Good for you Murray...hang in the sport...Bill's coming to your rescue with more pork for property in 2010...the govt won't let you down...the mps have too much invested in the whole stinking property slash tax rort to let it fallover.

But,but,but

something important happened this week: for the first time since the start of the financial crisis, investors demanded a bigger premium in return for holding British debt than Spanish. Indeed, the cost of our government borrowing "“ as measured by the interest rate "“ is rising so quickly that within a month it could be higher than Italy's.

Yet however much today's politicians may be tempted to try to inflate away their debts, this avenue is in fact far more difficult than it was in the 1970s. First, it would mean throwing away the 2 per cent inflation target that the Bank of England has kept to for more than a decade. Second, investors are far more mobile than 30 years ago: one of the by-products of globalisation is the speed with which capital can be withdrawn from a country. That means, according to the International Monetary Fund, that inflation in single digits "“ say 6 per cent "“ would "not make much of a dent in the real value of the debt", because investors would charge the governments higher interest rates if they got even a sniff of impending inflation. Which implies that only inflation in the high double digits "“ 1970s style "“ would do the trick

http://www.telegraph.co.uk/finance/comment/edmundconway/6830938/Theres-o...

I think of debt this way.
I earn 130k, so drive to Taupo and but a deposit on a 700k house. Next year at Christmas I earn another 130k but I have to spend 60k of it on the interest and another 20k on running costs, so I only pay my debt down by 50K, its a bit of a no brainer really, yet I need more fingers to count the number of friends in this position. The only thing thats changed is now the house prices are back 30% and due for more of the same, now they are paying of a house they dont even have any equity in.
I think our Govt is embarking on exactly the same stupidity with its present borrowing policy.

"the whole stinking property slash tax rort"

Yes - it really stinks how property investment is taxed in exactly the same way as any other business, both capital wise and expenses wise. It's probably a 9/11 related conspiracy as well as a rort.

Exactly larry, property is under the same tax laws as every other business. You pay tax on income, but can claim operating expenses (including loan interest) and depreciation on assets, with any asset sale not being taxable unless selling such assets IS your business.

But then we have to do SOMETHING for all the TPS (Tall Poppy Syndrome) sufferers out there before they slip into an incurable depression, don't we?!!........

Sam_M you are not liable for the company's losses so what losses would you be claiming?

Sam, would you be paying tax on capital gain after selling them?

Sam being a shareholder by default does not make you liable for a company's obligations. However should you set up a company (like an LAQC) it is in your best interest to keep it solvent so you should obviously be topping up any negative cash flow.

Perhaps a better example would be you borrowed money to buy shares in a company. The company share dividends were not covering the cost of the interest you were paying on the loan - you are losing money. In theory if you used an LAQC to purchase the shares and the interest was again not covering the dividend then yes you could claim the loss off your own PAYE income (can any accountant confirm this?)

The problem is finding a bank that would lend you the money to buy shares with such a high risk business model and there in lies the problem. Property is not treated any differently but banks prefer to lend against it as it is more secure. We actually need to treat it differently to encourage more productive investment.

Sam_M - "In my question though, I'm focussing in on the ability to offset cash losses on an investment property against my PAYE. As I undestand it, this is a benefit which is peculiar to property"

Rental properties are a business and subject to the same rules as any other business. If you ran a small business as well as working for PAYE, and your small business made a loss, you would be able to offset that against your PAYE.

You are able to claim any expense incurred that is necessary to operate your business. With property that includes loan interest, rates, insurance, maintenance, lawnmowing, management fees etc and depreciation on fixed assets.
With shares you generally don't have any "operating expenses". Someone correct me if I'm wrong, but if you were to borrow money to buy shares (can be risky!) I'm sure you could offset the loan cost against dividends received, just the same as offsetting loan costs against rents received. With depreciation, it needs to be a physical asset owned by you or your company. When you buy shares you don't own a physical asset, just a paper certificate! Depreciation is also based on the cost to you, so if you inherit a property you can't claim depreciation as your cost was zero.

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