'Bad for renters': Govt unveils tax changes targeting property speculators days before start

Author
Thomas Coughlan, NZ Herald,
Publish Date
Tue, 28 Sep 2021, 9:57AM

'Bad for renters': Govt unveils tax changes targeting property speculators days before start

Author
Thomas Coughlan, NZ Herald,
Publish Date
Tue, 28 Sep 2021, 9:57AM

The Government will unveil the details of one of its most powerful housing policies today, months after they were first announced to the public but days before they are due to come into force. 

In March, the Government announced its housing package, which was centred around an extension to the bright line test and removing the ability of property investors to deduct the interest on their mortgages from their taxes. 

The policy was announced without any of the details being fully worked through, although details were promised before October 1. 

The big question is just what constitutes a "new" property. In a bid to encourage investment in newbuilds, the Government promised to exempt newbuild homes from the rules. 

But just what constitutes a new home and how long a home qualifies as being new have never been answered. 

Most of the big questions around the policy hark back to this problem. For example, it's not yet known what happens to a landlord who moves into their "new" rental property and then moves out and rents it again. 

National Party housing spokeswoman Nicola Willis said unveiling the details of the policy so late was "bad lawmaking". 

"It's going to create a bonanza for tax lawyers and tax accountants," Willis said. 

"This is completely last-minute because these changes come into effect on Friday, yet only now are details being released. 

"This will be bad for renters and likely to put up rents, will put off mum and dad landlords and discourage investment in new housing". 

The policy has been criticised by the Right, who say it is a tax grab by the Government which will push up rents for tenants. 

Lacking the full details of the policy, officials have been unable to estimate how much revenue it would generate for the Government, but Treasury boffins reckoned that if implemented in 2018/19, it would have stung investors to the tune of $800 million. 

Advice to Finance Minister Grant Robertson from earlier this year said it could cause highly-leveraged property investors to pull out of the market, potentially selling to first home buyers. 

The changes will be announced by Revenue Minister David Parker tomorrow, and tabled as an amendment to a tax bill currently before the House.