Article: Property Investment
Property Politics with Frank Newman
The roadsides are littered with smiley faced politicians, our screens flicker images of our leaders hugging babies with snotty noses, or having a private cup before a media audience. These are sure signs that it will soon be that single day in every 1095 where we the voters have a say on how the country is run.
The slightly weird thing about this election is it seems to be carried out without any regard to the bigger events happening beyond our shores. Just last week the head of the International Monetary Fund warned about the possibility of a “lost decade” as debt burdened countries in Europe default on their obligations. That would have serious implications on interest rates and international commodity prices. Despite this, our politicians are promising greater spending, without explaining the seemingly magical process by which these funds appear.
Forty years ago J F Kennedy lifted the spirits of his nation when at his inaugural address he said, “Ask not what your country can do for you - ask what you can do for your country.” When one listens to our leaders, one could be forgiven
for thinking that our version of the Kennedy inspiration is, “Ask not what you can do for yourself – ask what the government can do for you”. Somehow, someone seems to have overlooked the power we each have to make our own tomorrow better than today.
Unfortunately the last three years have not been great for property investors, and there is nothing within the new crop of promises to suggest any improvement. Property investors are easily vilified so no tears were shed when National, without notice:
• Removed the right to claim depreciation on buildings.
• Changed the Working for Families eligibility to exclude investment and rental losses.
• Changed the rules on loss attributing qualifying companies.
• Made significant changes to the Residential Tenancies Act, which on balance seemed to offer more protection for tenants than landlords (despite some 90% of all Tenancy Tribunal cases being against tenants).
The only bright spot is it could have been a lot worse, and things will be worse if some other parties have an opportunity to put the boot into property investors. Here is a quick summary of what the parties are proposing for housing.
The National Party has ruled out a capital gains tax, says there will be no other new taxes, and no further changes to the Residential Tenancies Act. This of course does not mean they will not make changes, they have just not said they would make any.
Labour would implement a capital gains tax of 15 percent on sale of investment property, would consider reinstating gift duty, would revisit tenant insurance liability, ring-fence property losses, and regulate property managers.
The Greens would back a capital gains tax, ring-fence property losses, require all rental properties to meet minimum standards for warmth and insulation, and extend the government-assisted home insulation scheme to 400,000 homes.
Hone Harawira’s Mana Party would introduce a capital gains tax (Maori land would be exempt, of course), introduce a financial transactions tax, and would introduce a warrant of fitness for all rental housing.
United Future would make it easier for private landlords to receive rent direct from Work & Income, adopt a strategy to insulate all homes, and would require all buildings on the market to be assessed for energy efficiency.
The Maori Party support a capital gains tax. The ACT, Conservative and NZ First parties have no specific housing policies on their websites.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
