Another blow to landlords

Rental Property

From 1 April 2019 residential landlords will not be able to offset their rental losses against other income. Rental losses can only be carried forward to be offset against future profits, which may be years away. This is yet another landlord-bashing policy from a government that hates capitalists. The really sad part is that landlords can generally sell easily in today’s property market, whereas tenants are finding things tougher and tougher. Still, you know what socialists are like. They’d rather have people living on the street (and dependent on the government) than have a ‘rich prick’ make any money. That is already the result of its landlord bashing policies, and things are only going to get worse from here. quote.

Soon landlords won’t be able to offset their residential rental losses against other income, as the Government introduces ring-fencing legislation.
The legislation is a move to reduce the Government’s perceived unfairness between property investors and owner-occupiers.

The Government expects the rules to improve a first-home buyer’s ability to compete with investors, improve housing affordability, and increase tax revenue by about $190 million per year.

In the coversheet to the Regulatory Impact Assessment issued by Treasury and the IRD which accompanied the legislation, the IRD Quality Assurance reviewer stated:

“[…] it is not possible to be confident that the stated objective is being met in the best way and with the least unintended consequences.” end quote.

Lester Gouwland

So the government is punishing landlords, reducing the number of private rentals, putting tenants under even more stress, yet they don’t actually know how this policy will work?

What an absolute pack of morons.

This policy applies only to rental property. If, for example, you have a small business selling stuff on TradeMe, you can offset your losses against your other income. With absolutely any other type of business, it is okay to offset losses… just not rental property.

Many landlords are making rental profits these days, but generally that only applies to landlords who have owned their properties for a few years. New investors generally make losses for the first few years. Even if these investors do not sell up immediately (possibly because they will be caught by the Bright Line test, where tax is paid on an investment property sold within two years or five years, depending on the date of purchase), it will discourage new landlords from coming into the market.

This is Labour’s endgame, of course, as they perceive that landlords have unfair advantages over owner occupiers. As landlords pay tax on rental profits, and this policy may well add to the reduction in tax thereon, clearly this government does not understand the difference between the two. That is part of the problem.

The truth is that, in a supposed effort to make the property market fairer, the government is shooting itself in the foot. Landlords provide a valuable social service that the government is unable to provide. As more and more landlords sell up, the government will have the enormous headache of having to house more and more people. With over 6,000 people waiting for social housing at present, and countless people in temporary housing, this headache is only going to get worse. Private landlords once partly solved this problem. What a shame the government had to kill the goose that laid the golden egg.