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LAQC losses tripled to NZ$2.3 billion between 2003 and 2008
Figures from the Inland Revenue Department (IRD) show the value of tax losses claimed by LAQCs (Loss Attributing Qualifying Companies) in 2008 was NZ$2.258 billion, more than triple the losses claimed before the housing boom began in 2003.
Many rental property investors have used LAQCs to structure their investments so as to make tax losses they can claim against their regular incomes, which has been blamed as a factor pumping up property prices. Some have even put their own homes in their LAQCs, which the IRD is cracking down on.
An IRD spokeswoman told interest.co.nz there were at least 40,000 LAQC's registered with the IRD, where the stated LAQC activity included, but may not be exclusive to, property. Just under 130,000 LAQCs filed returns for the year.
The value of losses claimed was up from NZ$1.822 billion in 2007 and NZ$709.8 million in 2003.
The area of the tax advantages for property investors is one focus for discussion by the Government's Tax Working Group. It will meet again on September 16 to discuss 'base broadening options'. Some rental property investors have used LAQCs and family trusts to offset tax losses from rental properties against their regular salaries and wages, helping to reduce their personal tax bills and fuel the property boom from 2003 to 2008.
The average LAQC loss claimed in 2008 was NZ$17,383. This was up from NZ$15,441 in 2007.
The IRD was given NZ$14.6 million over three years in the 2007 budget to strengthen its focus on property transactions, with property tax compliance being identified as a specific risk area for the Department.
"In November 2007, Inland Revenue issued a Revenue Alert to tax agents warning about the practice in which shareholders of a LAQC, involved in residential rental, live in the home owned by the LAQC," the IRD spokeswoman said.
Related Topics
"We have followed this up by undertaking an awareness campaign since about May 2008, which involved writing or phoning individual shareholders in LAQCs that have rental losses, to remind them such arrangements are considered to be tax avoidance," she said.
"We contacted just under 38, 000 entities directly with information on this issue. We have identified a smaller number of these that are of particular interest and are working through these to evaluate their specific circumstances."
"We have also held approximately 2,500 advisory meetings and seminars that have also included information on private residences held within an LAQC."
LAQCs can have a range of business activities that might include property, it can be difficult to determine exactly what proportion of these losses is attributable to property, the IRD said.
76 Comments
In terms of the tax-base
In terms of the tax-base implications of our Brave New World, it's worth reading the US story about Local and State Gummints, which have apparently reached the limits of taxability there...
Linky: http://online.wsj.com/article/SB1000142405297020473180457439060311493964...
Tax payers dollars hard at
Tax payers dollars hard at work:
"The IRD was given NZ$14.6 million over three years in the 2007 budget to strengthen its focus on property transactions, with property tax compliance being identified as a specific risk area for the Department."
and goes on to say...
"LAQCs can have a range of business activities that might include property, it can be difficult to determine exactly what proportion of these losses is attributable to property, the IRD said."
...so tell me exactly how our $14.6M is getting spent!!
Good Morning All Great article
Good Morning All
Great article re LAQC but I believe a plan of action is needed. A plan with action! To begin with, the much needed introduction of capital gains tax on all rental properties with the exception of the family home. How simple is that to start with?
I wouldn't mind another subject re baby boomer bashing because in all truthfulness the millions of rich?????? baby boomers born, did not ask to be born. Time to point the finger at the silent generation (1923-1943) who unfortunately could not find a sport outside of the bedroom. We cop their "depression" after WWII.
That there's classified intelligence Sam
That there's classified intelligence Sam and you aint not allowed no knowledge of what they spend your money on. It paid for the wine biscuits and the tea, sugar and corfee.
Waymad, Just reading Brave New
Waymad,
Just reading Brave New World Revisited.......Huxley was spot on with his predictions. Pass the soma please.
...Good link waymad. I don't
...Good link waymad. I don't know how much of the US situation is media hype, but there are some horror stories coming out of that country.
Reference LAQCs and investment property, as most have discusseed, all that is required is the appropriate enforcement of the current income tax laws to stop the rort, thus negating the need for a capital gains tax, which I am not in favour of.
Fairfax O'R: How could enforcement
Fairfax O'R: How could enforcement help?
Surely under the current law establishing a LAQC so that losses can be counted against the tax liability of the primary income is explicitly a legal practice? They weren't set up by legislation in the 1990s for any other reason, were they? & the tax free capital gain (as long as the intention wasn't to profit from the capital gain, when the purchase was made) is also totally legal also?
Explanation please!
The recession may be over
The recession may be over and unemployment is not likely to reach previously expected heights, says the Treasury.
It bases its upbeat predictions on the international recovery, positive migration figures, rising business and consumer confidence and an improving housing market.
Not sure these losses would
Not sure these losses would even reach half of what it might cost the government if it had to accomadate all these tenants.
The Government is getting it cheap, no management costs, repairs, builders contracts, plumbers, etc ...
Furthermore, beign a landlord is stressful, anyone who has been/ or is one will know ...
Why do we allow people
Why do we allow people to avoid/side step tax? From a simple mans point of view, if the playing field was fair, wouldn't nothing be tax deductable?
As a salaried worker, if things were fair, wouldn't I be able to claim the cost in driving my car to work as a write off? My shoes? My suits? My business lunchs? ;-)
If everyone paid their "fair share" of the tax we would not need to spend so much on trying to gather it, or fight people trying to avoid it?
I am guessing if all the taxes that were avoided were paid, my tax bill as a salaried worker would be less.
I guess it depends on what side of the coin you look at. The same coin can be viewed from different angles yet the observer can see different things......heads or tails.......same coin....different outcome.
LAQC - if you sell
LAQC - if you sell your house cheap on the basis that it went to a first home buyer I am sure it would solve three problems.
1)Cheaper home for one person/family who could not afford to buy in this market.
2)You get to avoid the stress of owning a rental.
3)The government does not have to look at housing that person/family
Sounds like a winner to me, three birds with one stone....is that some kind of record?
As Bernard so smugly pointed
As Bernard so smugly pointed out this monring on Radio Live, the LAQC is loved by the middle income earners. It is these people who pay for the rest of the country's shortcomings and keep it ticking along. It is these people who are usually quite mobile with tehir jobs too. Who will pay the taxes when they have left?
This (NZ Herald) article suggests
This (NZ Herald) article suggests that there are 600000 rentals in this country.. anyone know how acurate that figure is?
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1059...
Quote:Landlords who together own about 600,000 rented houses, units and apartments.......
If that's true, its no wonder there is a shortage of affordable properties for FHB's!!
Raf: soma, mmmmmmmmmm A leetle
Raf: soma, mmmmmmmmmm
A leetle quote from John Greenleaf Whittier: from 'The Brewing of Soma' (I have an old edition to hand)
'They drank, and lo! in heart and brain
A new, glad life began;
The grey of hair grew young again,
The sick man laughed away his pain,
The cripple leaped and ran.'
Truly, there is nothing new under the sun....
How could the previous Gumnut
How could the previous Gumnut be such simpletons that they did not see this coming ? Their policies handed money hand over fist to the already wealthy . And their tax meddling hindered the poor . The great irony of socialists , is that they hurt the very people that they claim to support . Well done Michael Cullen , you gave great succour to the " rich pricks " . You'll be welcome in cocktail parties in the posher suburbs throughout the land , forever more !
And just what will happen
And just what will happen to all those tenants if these so-called rich, tax-avoiding, rental-property owners are forced to get out of the rental property market? The Government will then be forced to take over the role of landlord again - something they have never been good at and it has cost the taxpayer millions in unpaid rents, damage to state housing, high maintenance costs and insurance for homes that end up being located in ghetto areas because the government cannot discriminate against the poor, beneficaries and the unemployed when it comes to housing people!. Get off the grass Hickey! Today's landlords are not making a killing out of rental houses you can be assured of that. No, they are cleaning, spending their own money on removing other people's dirt and rubbish, and slaving away to try to have an investment they can use as supplementary income in their retirement days. That's IF there's a pension for them to supplement when their time comes.
Actually this is quite ironic...
Actually this is quite ironic...
A few years ago, I was trying to recover money from a tenant of mine that did a runner. It took me two years to recover the debt, but I did recover the amount in full so I was happy. However the cost to the taxpayer would have been significant, each time the tenant moved house (and city) the court bailiffs had to drive out to the new place (several times) wait for the tenant. Finally a warrant for arrest put an end to it.
The interesting thing is that within a few weeks of the tenant doing a runner, they could have been easily tracked down at their place of work via the IRD. However the IRD will not disclose these details even when there is a court order in place (and even directly to the courts). The "Tax Administration Act" supersedes all other Acts in relation to this.
This is an example of how inadequacies in the system could contribute to losses for a landlord.
Jenny - if you could
Jenny - if you could charge your tenant(s) more, you would. The tax saving has nothing to do with it, although potentially the property wouldn't be worth so much without it. Either way, the property still exists, and the tenant still pays the same. More tax gets paid - that is all.
Philly - if you buy a property that makes a tax deductible loss, except in a few select circumstances you must have bought it for capital gain. Thus, buying for capital gain = taxable capital gain. It's not deducting the loss that's necessarily the issue, its the tax free capital gain.
I don't believe this is
I don't believe this is an argument against landlords. people have to live somewhere and some choose to rent rather than buy. for some they have no choice though as prices are prohibitive and others do not wish to commit to owning.
This is more about a taxpayer transfer to property owners. ultimately it has raised house prices above the level they would have been had the LAQC framework not been in place.
look at shares: i can buy a share for income (Telecom) or growth (Rakon) or a mixture of both (F+P Healthcare). But i cannot 'write off" my capital cost of owning the shares which provide a negative cashflow.
if rental yields were at a more appropriate level then landlords would be recompensed for the costs of renting out their property. why should taxpayers bear this burden?
either our wages are too low or our house prices too high. but negative gearing is highly distortionary and creates unhelpful speculative tendencies in the property market.
It does seem a bit
It does seem a bit one sided that Landlords can claim the losses against their tax, but not have to pay any tax on the capital gains. If you're going to have one, you should have the other as well. That seems fair to me.
I agree too that private Landlords are necessary, they play a huge role in housing a large part of the population of NZ. I wouldn't want to see them disappear, but the playing field needs to be levelled (as per my opening comment).
@ Raf - Yet again,
@ Raf - Yet again, I completely agree with what you're saying.
>"if you buy a property
>"if you buy a property that makes a tax deductible loss, except in a few select circumstances you must have bought it for capital gain."
Not necessarily true - it may make a loss initially, but that loss will reduce over time by the following:
1. Reducing the size of the mortgage (i.e. not interest only loan)
2. Increasing the rent
In these cases the intention is to have a profitable investment property in the longer term.
Jenny, many people are renting
Jenny, many people are renting because they can't afford to buy.
If say, half of the 600,000 properties owned by landlords were put on the market it would end the 'housing shortage' and drive down prices.
Demand for rentals would fall as people bought their own homes.
Thus starting the process of building their own retirements instead of funding yours.
Raf you can, if you
Raf you can, if you borrow money to buy the shares and the interest is greater than the dividends.
You can't write off your capital but you can gear up to make a tax loss which you can offset against other income then take the capital gain when you sell the shares. The problem is getting a bank to lend you the money on shares.
This is why I have posted several times that interest shouldn't be deductable on property. It is the gearing that makes the tax loss.
The other problem is that banks will lend high ratios on property (because it never goes down) but wont lend (to the same ratios) on shares and business. ie the productive sector
LAQCs don't account for all
LAQCs don't account for all rentals out there. My rentals are run through a holding company which is owned by a family trust.
Housing is NZs biggest economy. We are a small island in the Pacific. There is only so much land. People need housing. If I couldn't deduct my losses against my income then I would probably contemplate moving to aussie. The whole economy would be affected. Accountants, lawyers, property maintenance, real estate etc etc
Leave it as it is. Property allows people to have a foundation for retirement.
Don't you have to be
Don't you have to be VERY careful with that staratgy, NevilleWC, for fear of the IRD classifying one as a trader, and hence capital gains are fully taxable?
>â€if you buy a property
>"if you buy a property that makes a tax deductible loss, except in a few select circumstances you must have bought it for capital gain."
Sam's response is dead right. It is the INTENTION when the rental was bought that is the key. All you have to do is say "I intended to rental returns to go up over time to pay the interest payments & take away the losses. And I am selling now because I want to do something different with the $$, not to make a capital gain". If you keep saying that & nothing can be proved against you, then I understand you are away laffing.
Mix that vigorously with the LAQC system, add a seasoning of deductibility for WFF benefits, & you will have a lovely loaf of "Rortable Supreme"!
@ 28yrold - sure, keep
@ 28yrold - sure, keep on claiming the losses against your tax, but then is it not fair that you should have to pay a Capital Gains Tax when (and if) you sell? Every other form of investment requires that tax is paid on the income earned (interest etc) so why should property be exempt? Especially if you've been claiming the losses on the way through!
@ Jenny & LAQC Couldn't
@ Jenny & LAQC
Couldn't agree more - except to add they cost existing landlords the millions in missed rent damages etc rather than to Government if housed in state housing - hence saving the taxpayer those millions... because i don't get eight people to lean on shovels to look at a hole, i get into it and do it for free thinking 'if those dirty rotten bastards paid their rent and didn't damage things i could afford for a contractor to clean up this ****** mess"
I can not afford SkyTV but my tenants can... go figure...
"I am selling now because
"I am selling now because I want to do something different with the $$"
According to the IRD that is not a sufficient reason. To avoid it you have to show severe financial duress.
To the 28 year old
To the 28 year old
We wouldn't like to lose you but if you choose to move to Aussie ... know that Australia long ago introduced capital gains tax on investment properties when sold. The family home has always been exempt from capital gains tax in Australia.
Neville, I didnt think Interest
Neville,
I didnt think Interest was deductable in LAQCs for property?
@ Captain Crab i don't
@ Captain Crab
i don't think the IRD let anyone avoid anything, but if an element wasn't in the original picture why add it later....
LAQC's are terrible. They allow
LAQC's are terrible. They allow PAYE earners to get the same tax treatment as companies. This should not happen as only companies and the wealthy who control them should be allowed to deduct expenses from income. PAYE earners should have to pay their business expenses out of tax payed income.
And, Karen, don't forget to
And, Karen, don't forget to remind 28-year-old about the stamp duty that's payable on all Australian property transactions; and the State financial transaction duties etc....
Captain Crab said: “I am
Captain Crab said:
"I am selling now because I want to do something different with the $$"
"According to the IRD that is not a sufficient reason. To avoid it you have to show severe financial duress."
That is complete nonsense Crab and yes interest is tax deductible.
LAQC's are no better or worse than any other corporate structure. Streaming tax losses is nothing new. Certainly don't need an LAQC to do it.
CGT's have zero overall impact on property markets.
Has this site become riddled with IRD plants or something? All these people advocating paying more tax is just a little too screwy for me.
So what does an LAQC
So what does an LAQC do that can't be done otherwise, and in which case why not do away with them, Mitch O? And if CGT makes no difference to the market, then why not just bring it in?
C Crab Not an expert,
C Crab
Not an expert, but as far as I know LAQC's are just like any other company for expenses. Costs incurred to derive assessable income are deductable. So interest is deductable.
The difference that make LAQC's different than other companies is that in normal companies losses have to stay in the company to offset future profits ie you can't give the loss to a shareholder to offset that shareholders other income. Telecom makes a loss, the shareholders don't get a negative dividend.
LAQC's you can. They are like partnerships with limited liability.
@veedub/Karen I'm a buy and
@veedub/Karen
I'm a buy and hold man myself, not a property trader.
My point about moving to Oz was for my job, pays way better over there than in NZ...hence the foray into property to build up a retirement
PS. If the government did introduce ring fencing of property losses they would be tossed out at the next election and there would be nothing to talk about on this blog
Harriet, Nothing. It's just an
Harriet,
Nothing. It's just an efficient ownership vehicle.
Are you an IRD plant? What would be the point of a CGT? Do you want to pay more tax?
Hell if you're so into taxes I suggest you make out a cheque to the IRD for the amount you don't already pay to them. Inefficient government will find plenty of ways to waste your money for you.
Mitch O: power to your
Mitch O: power to your arm. Great to see some Truth.
I've stopped commenting on the LAQC threads (other than this). They're so full of Big State misinformation - which I've tried to correct on other threads - and are unseemly. Still, Bernard can rely on them, and the gaggles of sheeple braying for yet more tax, to drive up page clicks.
The way I see it,
The way I see it, CGT is just a way of evening things out a little. You can't take with one hand (claiming losses) and then take again with the other (no CGT). Those like 28yrold won't have to worry about it anyway.
Mark; You are opinionated, which
Mark; You are opinionated, which I have no problem with. But it doesn't necessarily make you right.
To Harriet Good comments re
To Harriet
Good comments re stamp duty in Australia for the 28 year old.
What do the majority of New Zealanders want?
A very "fair" and "just" system. Thanks for your comments.
No Harriet, it is the
No Harriet, it is the fact I speak to the truth, pertaining to the facts of reality, that makes me right. And the a priori truth, re this thread, is that happiness is founded on liberty, and that on property rights (including to keeping the bounty of one's efforts).
28_year_old - do you really
28_year_old - do you really believe we don't have much land? Either way, I personally think the rationale you've set out is why this country is effectively doomed in the medium term. Housing, as you describe it, is not much more than a Ponzi scheme...
RE: my comment on assumption of capital gain - I'm just saying the IRD should assume that and put the onus back on landlords.
I'd also note that if depreciation recovered was rigourously enforced that a large portion of the benefit of LAQCs is lost (other than time value of money). I can only assume that it isn't.
The fact that their are
The fact that their are so many rentals running at a loss would also imply that there are many out their who are quite happy to use a tax rebate to subsidise their losses, in the hope of a long term capital gain that makes it all worthwhile. Removing this privilage would have one immediate effect - and that is landlords would be forced to either dump unprofitable properties, or have to up the rents substantially to make it profitable. The second option would certainly hit the lower income earners - as I would suggest that their are many middle income earners effectively subsidisng the rents of lower income earners through LAQCs.
As a landlord I have
As a landlord I have no problem whatsoever with a capital gains tax. This might at least allow me to claw back some of my capital if I make a loss on the sale of the property. There is no rule in place that says you always make a gain - I know I've lost money on 3 properties over the last 17 years.
I don't believe anyone has pointed out that the losses claimed due to depreciation on a rental attract tax if the property sells for more than was paid for it either. The whingers about landlords and "rich pricks" ought to spend more time doing something to improve their lot rather than complaining.
People seem to be confusing operating losses with capital gains all the way through this thread. No wonder NZ'ers are reputed to be financially illiterate!
IanC, re your note on
IanC, re your note on depreciation recovered, yes, you are dead correct, in the first instance, as I pointed out on another thread. Often it is recovered onto a higher tax rate than was shielded previously by the depreciation, and the investor is worse off than by claiming. I have advised many clients to make a retrospective election not to depreciate rental properties (meaning no depreciation is ever claimed).
Just one more of the confusions that people have on tax in this area (including not understanding at all the function of LAQC's, and that without them, people would just invest in their own names to the same effect, so this whole beat up about dumping the perfectly legitimate, and useful structure of the LAQC, in all areas of business, is wrong-headed from the get go. But for some reason, Bernard, and every mainstream economist I can recall, including Infometrics who should know better, want to load us with yet another tax to even out over-taxation in all other areas. With these guys for friends ...
As for IRD not policing it, I would disagree with that statement. Most rental accounts would be have returns filed, I assume, by accountants/agents, and they would always be returning depreciation recovered: that's simple ethics. Why would they not.
That's it. Back to work.
Funny thing is most LAQC's
Funny thing is most LAQC's are set up for mum and dad investors. The shares (and losses) are split 50/50 - no different that if they were held in there own names. Although shares can be weighted so losses are allocated to the person on the highest tax bracket.
LAQC's do provide a degree of risk management my limiting the liability of shareholders to the equity they have contributed and the assets owned by the company. Use of a LAQC and a family trust can further limit risk.
Example - Wally and Lara
Example - Wally and Lara own a family home and a rental property. Family home was purchased for $400K and has a mortgage of $100K. Rental property was purchased for $300K and has a mortgage of $200K. They set up an LAQC and sell rental property to it for $300K. The LAQC borrows $300K to pay Wally and Lara. They then repay their existing debt. New debt in LAQC is 100% deductable and family home is mortgage free. Any tax deduction they claimed on depreciation before they transferred the rental property to the LAQC will need to be repaid.
Thanks Shorty, drop me in
Thanks Shorty, drop me in it why don't you!
Another recycled article from interest.co.nz
Another recycled article from interest.co.nz yawn! I think the negativity bubble has burst. This amount of negativity and moaning about landlords was never sustainable in the long term. I predict this site's hits will fall by 30% by October 2009 as people find better things to do with their time like knitting or something. And I'll even bet a bottle of champayne on it! - actually Bernard dont you already owe me one?
Hehe - thought you'd like
Hehe - thought you'd like that!
If Politicians can get tax
If Politicians can get tax free money to rent in Wellington and The IRD COMMISSIONER waives FBT TAX ,i havn't read any complaints regarding the politicians benefits ,surely what is the difference,the last time i read the newspaper. all seems to be legal LAQCs ,and pollys perks .
"LAQC losses tripled to NZ$2.3
"LAQC losses tripled to NZ$2.3 billion between 2003 and 2008"
What a completely meaningless (though very attention grabbing) headline. If there's been a loss there must have been an income it was lost against. The loss figure only has meaning as a proportion of the income. The loss claimed may be 3x what it was in 2003, but what has the income done in the same time? - it sure hasn't stayed the same or the IRD would be paying out money.
And the average loss claimed has increased over the last 2 years by... exactly what it should have seeing as interest (being a large component of any loss) also went up - woop-de-do.
According to Statistic NZ the percentage of rented houses has not changed since 2001, which would tend to indicate that this entire thread is a red herring.
Also according to Statistics NZ house construction was barely matching population growth during the boom. It has since pretty much stopped and council's like Auckland City have banned residential development.
waymad "a gram a day
waymad
"a gram a day keeps the doctor away"....
"LAQC losses tripled to NZ$2.3
"LAQC losses tripled to NZ$2.3 billion between 2003 and 2008" is an exceptional headline! Well done.
Let me see.
What do we have here?
We have some tax payers "arranging their affairs" in order to "LEGALLY" pay LESS TAX.
What else do we have here?
We may also have a group of tax payers who "rip-off" Working For Families.
Apologies for going off the subject.
P.S. I don't think there would be many knitters on this site Paul. :)
Yes - Sam ... I
Yes - Sam ...
I wonder what the tax revene was for the same period from income on rental properties without loans? Only picking on the LAQCs is selective ...
The losses occur for only the first 5 to 7 years, then as (IF) rent goes up and the interest goes down (i.e. the principle reduces), then after that one must pay tax on any profit.
Also as Shorty has said
Also as Shorty has said ,
There is already a selling tax !?
On selling to an LAQC or other ... "tax deduction is made on the claimed depreciation"
e.g. over the first 7 years of depreciation (2% of value = 7000 on $350,000) = $49,000. If the landlord pays 38% tax, then IRD get back almost $19,000.
So there are two examples of how the taxpayers get back some of their $$$,
not too mention most of these landlords are also taxpayers!??!?
Real estate agent Ray White
Real estate agent Ray White Ltd has reported its August sales were almost 50 per cent higher than for the same period last year.
Ray White NZ chief executive Carey Smith said there was a 47 per cent improvement on August, 2008, with Auckland up almost 70 per cent up on last year's volume, and a turnover of nearly $200 million.
Wonder how much of that
Wonder how much of that 70 percent increase was new LAQC activity?
@ Shorty... yes but (BUT)
@ Shorty...
yes but (BUT) for the LAQC to get 100% finance they will probably need a guarantor i.e. the homeowner, therefore LAQC is then not limited to being limited but can lose/snatch the family home as well... risk and reward... will the moaners risk it all or does WINZ not make guarantees aside from draining the taxpayers dollar.
@ IanC
until now i thought you were an informed individual
Banks lend against market value
Banks lend against market value not cost. So if the MV on rental was 400K they wouldn't need to offer up the family home. Alternatively they could use a second bank to secure the required deposit. As for the gaurantee - selling the house to a family trust then gifting off the purchase price will protect your family home from the bank.
@ Shorty Not so... because
@ Shorty
Not so... because the cost is the market value, unless purchased earlier in the piece. the only way would be if it was a way earlier purchase and if transferring from previous long term private ownership to that of LAQC it is being done for avoidance therefore could be totally taxable in all departments. Additionally something you might like to know, if a property i.e. the family home is used as a guarantee over an other property deal, it will remain with strings attached even if there are none for a further two years no matter the structure it is placed into. furthermore if a trust is the guarantor, well you're right as you are not liable the trust is (as you have nothing to do with the trust - so to speak), so although you will be fine the trust might not be. just because it is in a trust does not make it bullet proof. just like if mum and dad guarantor something, yep you can be fine but it doesn't mean they are if it turns to custard.
When I brought my first
When I brought my first house in 2002 I secured the intitial deposit ($40K) against my parents house which was in a family trust. This loan was with the National Bank. I secured the balance of the purchase price of $190K against the property I was buying with ASB. ASB had no claim over my parents or their property. If it did turn to custard I would sacrifice my property and just worry about the debt secured against my parents property.
After a year the property was valued at $300K. I refinanced 100% of the purchase price with asb and National bank discharged my parents gaurantee. As it turned out I sold for $330K 6 months later. I sold the buildings at book value so there was no depreciation recovered.
@ Shorty... Side note; always
@ Shorty...
Side note; always check with your own adviser of course to verify best options for your own particular circumstances...
Hi everyone ! It's good
Hi everyone !
It's good to see more REAL KIWI'S waking up to what's being going on with there hard earned taxes ie :getting blown on SPIE's (smart prorperty investors) in there RORT of of tax system. (LACQs plus untaxed welfare capital gains!)
YOU just ask JK @ BE ABOUT SPIE's and AGENTS tonight!
THEY ARE GOING TO MOVE ON YOU ha ha
because if they don't they know they will be a 1 term Govt.
<a href="http://www.4ulv.com/show_winter_2008.html" rel="nofollo
show winter 2008
show winter07 monogram olympe
Treasury got it wrong -
Treasury got it wrong - rather than house prices dropping 10% they now say they will increase!
http://tvnz.co.nz/business-news/nzi-business-september-8-housing-industr...
They are actually economic losses
They are actually economic losses - duh. Even depreciation is just a timing claim given it is clawed back when the property is sold.
I don't really think that
I don't really think that it is a coincidence that the increase in tax losses claimed over recent years is fairly consistent with the rise in interest rates (expense) during the period. With the advent of lower interest rates I would expect to see a turnaround in the tax losses claimed in the next year (or few).....
Nav : Or maybe because
Nav : Or maybe because the second move of the newly inaugurated Labour Government , in 1999 , was to introduce a top tax thresh-hold of 39 % , kicking in at $ 60 000 . Thereby capturing in increasing population of the middleclass ....... Later they offset that for some , by introducing WFF , another ubiquitous attempt to snare the greater proportion of the populance into the welfare state . ....... . And whilst Helen and Michael focused on the success of these policies , LAQC's and the property market went stratospheric .......... . Ergo , the average Joe/Janet kiwi adapts very nicely , thankyou , to whatever foolish schemes the Gumnut of the day dream up . Bravo to the public !
@ Simon7 What does the
@ Simon7
What does the 'E' stand for in your SPIE acronym? Perhaps REAL KIWIS cant spell?
@ab Actually LAQC are not
@ab
Actually LAQC are not quite standard corporate structures - they allow you to stream your losses immediately to a second entity as a cash offset. Where as with a standard company, losses can be used only to offset future profits or profits in related entities. They do no allow these losses to be offset about the income tax of shareholders.
What are the rates for 2BHK
What are the rates for 2BHK Whittier Apartments For Rent ?