IRD starts crackdown on property investors' LAQCs
Inland Revenue is stepping up its crackdown on people who have residential property in loss attributing qualifying companies (LAQCs).
Tuesday, November 4th 2008, 12:00AM
by The Landlord
It has sent 33,000 letters to people who have residential properties in LAQCs.
“We are writing to these taxpayers to ensure they’re aware of our concerns about private homes held in LAQCs,” IRD says in one of its letters.
It says its concerns are about property-based LAQCs where people have their private family homes in an LAQC, then rent the property back to themselves.
It says in these circumstances LAQCs may claim deductions for things like insurance, rates and maintenance that would otherwise be considered private expenses.
“In our view this activity is tax avoidance, with very few exceptions,” IRD says.
The department goes on to say that some people name a spouse or partner or friend as the tenant, even though they are still living in the property themselves.
IRD says it plans to increase its audit activity and the responsibility for getting things right rests with the taxpayer not their advisers.
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