LATE FOR A REASON
It’s 10 February and I have an excuse for writing my Feb comment so late.
Prime Minister John Key was to (and did) give his precursor yesterday on his sentiment towards the Tax Working Group’s recommendations on restructuring our tax base.
Much outpouring of grief and envy has been directed at what you and I know are struggling property investors and the enmity they foment by those vested interests who would prefer we all invested in the share market.
Hello?
Until the Commerce Commission starts handcuffing cowboy ‘businessmen” in their dining rooms or flash restaurants for collapsing company after company - as opposed to wincing privately as they blast their Porches back to the golf course, forget it.
Do you all think we are stupid?
The Minister of Housing, Phil Heatley, stated at the NZ Property Investment Seminar I also spoke at in August last year that NZ needed 19,000 new houses built a year and 12,000 maximum were being built.
Yesterday’s Herald spoke of immigration reaching 45,000 over the next three years and house prices rising dramatically because the supply is not there (yes, one for the books from the Herald).
Do the economists think all these investment properties are lying empty?
If you don’t get it neither do I – apart from envy and vested interests.
The actual decisions will come out in May’s Budget but Key has given a responsible and fair idea of what he’s planning….and we think it’s reasonable and what we expected of him.
From his hints yesterday, no overall Capital Gains Tax but watch for maybe an ever vigilant CGT if you sell for profit in a short time (2 years???).
Possible ringfencing of losses against personal income – this could spell even more angst for the unsophisticated who have been stitched up into Loss Attributing Qualifying Companies…(talk to us and get out now).
The abolition of the provision for depreciation of residential property (which, apart from maintenance, actually appreciates). This was simply a technique used to bamboozle the Tax Seminar victims into 100% cashflowing their overpriced “investments” and has to ultimately be paid back in any case when the property is eventually sold. The spruikers got so carried away a valuation practice even sprang up called “Valu-it” which specialized in valuing the interior of walls which you could depreciate at a different rate to e.g. bench tops or curtains. At this point it was obvious change was going to come!
And we’re likely to have GST increased to 15%, accompanied by tax cuts.
It all looks what Key is shaping up as – intelligent, fair and reasonable and bodes extremely positively for New Zealand’s future.
But if you are heavily geared and relying on personal tax offsetting the losses on that investment, yes, perhaps talk to us.
But it could have been real bad (excuse grammar).
Martin
MANAGING DIRECTOR
