Budget preview: Property in line of fire
The most likely tax changes affecting property investors are the toning down of depreciation allowances and potential ring fencing to prevent tax deductability of property losses against other taxable income. Also on the table is a rise in GST from 12.5% to 15% to pay for cuts in income taxes across the board.
Property investment was identified by the Tax Working Group (TWG) as "a major hole in the tax base concerning the taxation of capital, which is manifest in high investment and low returns in the property market".
ASB believes changing depreciation rules would help increase government revenue and discourage unproductive investment and debt accumulation in rental housing.
Treasury's estimates of household assets and liabilities currently show that houses make up nearly three quarters of New Zealand's total gross assets worth $603 billion compared to the $212 billion in financial assets.
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