Tax Changes Take Investors By Surprise | Impression Real Estate
Some features on this website may not be viewable as your browser is out of date and no longer supported.
Please consider an upgrade to a modern browser to enjoy all parts of this website.

Tax Changes Take Investors By Surprise

Posted by Impression on 28, Apr 2021

The Government took a surprise step in March when it announced tax changes that make it more expensive to own rental properties.

In addition to extending the bright line test to 10 years, removing the tax deductibility of interest on mortgages adds to the increasing costs for property investors.

There has been some good news for first home buyers, with the house price caps and top income thresholds all lifted, hopefully making it slightly easier for Kiwis to get into the housing market.

With only the March figures in right now, the housing market is still burning hot, with the national median price up $46,300 for the month, according to REINZ. We anticipate this slowing down significantly over the next few months. And if it doesn’t, more extreme measures may be enacted, says BNZ’s Stephen Toplis:

“The New Zealand government is dead set on curtailing soaring house prices… Whether or not the measures announced [on March 23] have the desired impact or not is neither here nor there. The fact of the matter is the government will do what it takes. If this set of policies fails then more will be introduced until such time that house price inflation abates (or even prices fall).”

From early report, investors already seem to be pressing pause on buying new properties. Certainly, if you have a mortgaged rental, it’s a good idea to talk to your accountant and your financial adviser about how these new regulations and tax decisions will impact your investment strategy.

© 2021 Impression Real Estate Limited - Licensed Real Estate Agent (REAA 2008)