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Every silver lining has a cloud

The good news is landlords’ have little need to worry about new tax changes – the bad news is that for many, the impact of the last round has yet to be felt.

Friday, September 30th 2011, 12:00AM 1 Comment

by The Landlord

"We've met with National ministers and their basic thinking is that the depreciation and the LAQC changes were really all that needs to happen," said NZ Property Investors Federation president Andrew King.

"They want to stimulate the rental property market, they don't want to have people withdrawing their investment because they don't want to have a drop off in supply. I think they're saying that's all that needs to be done really."

King said he thought ministers had realised the effects of the depreciation changes had been "larger than they thought" and that the change was set to have an even larger impact next year.

"A lot of people actually won't really realise what it's going to cost them until they put their tax return in next year."

The fact that many investors won't have felt the financial impact of the changes was echoed by the Auckland Property Investors Association (APIA) president David Whitburn.

"I don't think most people have felt it yet," he said.

"A lot of people have extension of time for their tax returns and the building structure change only took effect on April 1, so a lot of people won't have actually felt the cash impact, they'll have to wait for the end of the year."

King said investors needed to do their sums now and look at the possibility of increasing their rents.

"Work it out now and get your rents up so that you're compensated, by the time you work it out next year it's too late," he said.

"Have a look at what the market rents are doing, they are increasing and a lot of people aren't keeping up with those market rents. What they'll find is that next year they'll have lost $15 a week and they won't be able to get that back, that's gone."

« Home approval numbers show ‘strong increases’ Free Investment Property Showcase Events: Auckland, Wellington and Christchurch »

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Comments from our readers

On 3 October 2011 at 9:59 am Viv said:
I cannot see why rents should increase due to the depreciation changes. This is only bringing forward annually what would occur when a building was sold and the depreciation was recovered due to the continual increase in property prices anyway. Depreciation on buildings has been a false claim for many years. Don't forget that owners are able to write off maintenance completed anyway. At least they do not have any claw back of interest claimed over the life of the ownership of the property that used to occur.
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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 ▼6.79 ▼6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 ▼7.29 ▼7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 ▼7.39 ▼7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 ▼6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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