Monday, May 15, 2017

Time to end negative gearing

New Zealand has a housing bubble. One of the things driving this bubble is the ability of landlords to offset the losses of owning a property against their income, while collecting tax-free capital gains when they sell. Now Labour is promising to end that:

Labour is lining up property speculators by clamping down on tax loopholes to even the playing field in favour of first home buyers.

In a hard hitting speech to Labour's election year congress, leader Andrew Little said the loophole that let property speculators offset losses from their rentals against other income for tax purposes would be closed.

"Labour will close the tax loophole that allows speculators to claim taxpayer subsidies for their property portfolio," Little said.

"Right now, speculators can take losses from their rentals and offset that against their personal income. It allows them to avoid paying tax. This loophole is effectively a hand-out from taxpayers to speculators. It gives them an unfair advantage over Kiwi families."

Its about time. This tax break benefits speculators and rich landlords, while helping lock ordinary kiwis out of the housing market. While ending it won't solve the problem in and of itself - its a big problem and it needs to be attacked from multiple directions - it will help. And its something the government should have done years ago.

But I forget: National MP's own an average of 3.4 houses each, with Ministers owning 3.8. They're the people profiting from this rort. No wonder they want to keep it in place.