No more negative gearing
It has been a busy week in the Government’s crusade to crack down on those who benefit from property investment with the bright line test extended and a ban on letting fees announced.
Now, attention has turned to the ring-fencing of rental losses and today Inland Revenue (IRD) released an issues paper on the proposed changes.
The proposal is that property speculators and investors will no longer be able to offset tax losses from their residential properties against their other income – like salary, wages, or business income - to reduce their income tax liability.
The IRD paper says that currently investors have part of the cost of servicing their mortgages subsidised by the reduced tax on their other income sources, helping them to outbid owner-occupiers for properties.
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