The ACT Party has promised to bring forward tax relief for landlords by allowing them to offset rental property losses against other taxable income.

As it stands, losses from rental properties are ring-fenced so they can only be offset against current or future rental profits.

ACT leader David Seymour said that rule was one of "Labour's renters' taxes", which hiked costs for landlords who then increased rents to pay for it.

"If you're a sole trader or make other investments, such as commercial property, your losses can be offset against your personal income," he said.

"ACT's proposal levels the playing field and ensures treatment is consistent."

Seymour said the current policy meant legitimate losses could not be offset when cashflow was tightest.

"If cashflow is tight, it's much harder to carry out essential repairs if the tax deduction is delayed for years," he said.

"Removing ring-fencing will improve the viability of rental investment, including investment in new homes."

Seymour said the policy brought forward tax relief for losses that would eventually be deducted under the current rules.

"It doesn't increase the total deduction. But some losses may never be used, and earlier deductions reduce government revenue in the meantime," he said.

That would mean government revenue would reduce by $264 million in year one, rising to $303m in year four, which was accounted for in ACT's fiscal plan, Seymour said.

He expected political opponents to decry "tax cuts for landlords" but pointed out Labour said that about the government restoring interest deductibility.

 

"Nearly three years on, Labour has come to its senses and decided not to reverse ACT's change," Seymour said.