A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

Thursday, March 14th 2024, 10:19AM 3 Comments

by Sally Lindsay

“In the existing economic climate, renting has emerged as a more cost-effective alternative to property ownership and reinstatement of interest deductibility is of crucial signifience to the rental sector.

Corelogic statistics show the average family allocates 49% of its income to servicing a mortgage, contrasted with 22% spent on rental payments.

“Many rental property owners find themselves financially stretched, as they try to figure out how to supplement their mortgage payments to keep tenants living in their homes,” Horsbrugh says.

“The policy is fair. It is not a 'tax cut' for property investors; rather, it ensures that property investors contribute their fair share of taxes on profits. It will also have positive implications renters, as it mitigates the upward pressure on rental prices.

A more balanced and sustainable rental market will result, he says. "By helping to alleviate the financial strain on property owners, a more conducive environment is created for affordable housing and stability for tenants."

The federation says it views these developments as a pivotal step to encourage greater participation and investment in the rental sector, leading to improved housing availability and affordability for tenants.

Tags: NZPIF

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Comments from our readers

On 13 March 2024 at 10:32 pm Glenn Morris said:

Property investors and politicians need to remind everyone that just because those investors with a mortgage can claim interest expenses off their profit , they still pay full rate of tax on their earnings. They also pay the full council costs on rates, development levies, and insurance. By paying the full local authority fees social housing providers get a discounted service.

On 13 March 2024 at 11:59 pm DONAL mclean said:

Hi there
While I agree that the interest deductability is useful for investors and I am one. I am also a very small one and there is some very big Investors that will be clapping their hands with glee because they never slowed their investing during the hard times we have just been through but simply kept buying as prices dropped because they could.

This sector, that I am a part of still has to recognise that there are many who cannot afford to own and run rental houses let alone afford their own house and I am one who wants a country where that's still a possibility for all people.

This is still a government for the whole country not just their often very privileged voting sector.
Nga mihi
Donal

On 19 March 2024 at 1:31 am Tony Cranston said:

Well Glen if you have a problem with legitimate tax deductions there is nothing to stop you paying the tax and dropping the price of your rentals.
Most Landlords can't afford to do that.

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