Jacinda Ardern slashed negative gearing in NZ. The new government has brought it back

New Zealand is under new management and one of the major tax changes Prime Minister Christopher Luxon has made is set to benefit property investors the most.

This change did not apply to new builds, with the government saying at the time it wanted to "curb investors' appetite for existing residential properties". But several experts warn it is very difficult to attribute that change to any one policy when the dominant force on the market was likely the direction of interest rates.

"Previously, you were seeing figures around 20-25 per cent of the value of new mortgage commitments were going to investors. That dropped below 20 per cent from about April 2021 onwards and has remained lower since then. "Even with deductibility — when you can offset the interest payments against your tax bill — those property investors would still be having to sink in $NZ375 a week to support their investments.

Research economist Matthew Maltman who studies the New Zealand housing market said the Ardern-era change was a "big policy change in the rental space". "There was a shock to renters, and that going all the way to remove interest deductibility was going to make renting even worse. "In most places, if you have a loss you can offset that against your other income. So if you have a rental property and salary and wages, you can offset the loss from your rental property against your salary and wages," she said."The losses are contained, or ring fenced, within your property portfolio," she said.

"It's not very coherent and we usually say that coherency is something that is desirable in a tax system," she said.

Source: Loan Digest (loandigest.net)

Tax Deductibility Jacinda Ardern David Seymour Matthew Maltman Infometrics Brad Olsen Core Logic Housing Affordability Investors

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