Investor predicts rent increases

Rent increases would be the likely outcome if the Government pressed ahead with all the recommendations in the Tax Working Group report, the Otago Property Investors Association believes.

Several possible tax changes - most notably a capital gains tax - are aimed at people who own multiple properties.

Otago Property Investors Association president Cliff Seque suspected if a capital gains tax were introduced, rents would be raised to offset its effects.

However, tenants might be better placed to pay higher rents if changes to tax thresholds increased their incomes, he said.

Mr Seque said it was difficult to assess what impact the recommendations would have for property investors, as the Government was yet to decide which policies it might introduce and any changes would not happen until 2021 or beyond.

"My feeling is that they have given us the worst possible scenario, and to make it more palatable the government will water down some of the recommendations," Mr Seque said.

"In other countries with a capital gains tax, like Australia, they only have a tax rate of 15c and also allow for depreciation."

A capital gains tax would likely deter people from buying "fixer-uppers" and might also stifle demolition of old buildings and replacing them with new homes, he said.

The report left ring-fencing of losses - preventing investors from using any losses against their personal tax - up to the Government to decide about, but Mr Seque felt it was here to stay.

"I can't see that changing ... but I think they will play around with the thresholds of the different tax levels."

Comments

Well, he would say that, wouldn't he? As it is, rent rises follow any increase in tenant income. There is no 'getting ahead' for the wage earner.

 

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