A Quick Review for Rental Investors

Tips & Tricks – A Quick Review of Changes for Rental Investors – July 2021

PERSONALISED SUPPORT FOR YOU, AND YOUR FAMILY

My newsletter this month included a quick review for Rentals Investors

Increasing the bright-line test for property investors to 10 years.

This won’t affect most residential property investors as they have a long-term buy-and-hold strategy. The bright-line test for new properties is likely to remain at 5 years. Yes, there are some speculators out there but the majority of investors are by far hard-working Kiwis who just want to get ahead.

Ring Fencing of Rental Losses can now only be offset against rental income.

In the past, you could offset rental property tax losses against personal income such as salary & wages. This is no longer the case. The losses now need to be offset against the rental income once the rental property starts to make a profit.

Removing the tax-deductibility of mortgage interest costs for existing rental properties.

Yet to be confirmed but the tax deductibility for new properties is likely to remain. For existing rentals, this is likely to hit the more highly leveraged investors over the next 4 years. It is totally inequitable that the Gov’t is punishing people who are making efforts to generate their own income to subsidize their retirement income. These are legitimate businesses that are supplying much-needed accommodation to New Zealanders.

For more information about the above changes go to the IRD Website or talk to your tax professional.

Introduction of the Rental Property Warrant of Fitness.

The Rental Warrant of Fitness is an assessment that can be requested by landlords and tenants to understand the current state of rental property. The scheme is designed to lift the quality of rentals, protect tenants and make sure their homes are liveable, safe, and dry. To find out more visit the Healthy Homes website.