Sunday Rant...
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GRA Blogs
Articles by Matthew Gilligan
Labour intend to ring-fence property losses to future property income. This will send thousands of investors broke fast. Take investors' tax refunds away, property values crash. This is well documented overseas. Sweden property values dropped 35% when they ring-fenced losses and the following government reversed the policy, with values immediately thereafter recovering.
Accountants would get a mountain of pre-change planning work and we would have years of work to do, while lots of New Zealanders will go broke with ring-fenced losses and insolvency revenue will grow too. I'm not going to sit by and have to charge my clients for work that is going to make them go broke. Labour, are you thinking this through?
I would not want to be a banker though with losses ring-fenced... it will make an already difficult environment treacherous and property investors would want to be selling sooner than later.
This really is playing with fire by Labour with little short-term upside given the global backdrop of deleveraging, and capital growth prospects in NZ with higher interest rates on their way (next year or sooner), and potential for major problems globally as Asia and Aussie come off the boil and Europe and the USA choke on their indebtedness. This must put pressure on interbank lending rates within 2 years, especially if we see sovereign default in the PIIGS or USA.
The massive bureaucracy they built and squandered our money on, the buy back of KiwiRail, now Capital Gains Tax, to name but a few blunders.
Back on Tax
If you want instant cash flow targeted on property - it's simple. Introduce stamp duty like the rest of the world. Instant 3- 5% tax on the turnover in the property sector dampening speculation and raising major government revenue, without the complexity of CGT.
If you are worried about ring-fencing of property losses, we are here to help - email [email protected], phone +64 9 522 7955, or come and see us.
Matthew Gilligan
Managing Director and Property Services Partner
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Testimonials
Hi Matthew, my name is Mark Soster and I would just like to congratulate you on your wonderful book Property 101. A few weeks ago I had a "financial awakening" and began devouring all the books I could find on the subject, however I keep coming back to yours. After 3 reissues from the library I think it easier now just to buy it. Wonderfully simple yet complex enough to require multiple reads and note taking. It has taken a lot of the fear away with regards to property investment but also tempered me with caution. Without it I would probably have stupidly invested anywhere but Auckland, telling myself it’s too expensive, I now appreciate why would you invest anywhere else? The numbers never lie, in a 20 year plan then Auckland is King for capital gain. As a fan of maths (the only perfect thing on earth?) I can see how each opportunity can be ruthlessly examined on a purely financial level. Anyway, thanks again, I will definitely be contacting your company with regards to coaching and expertise. - Mark Soster - October 2017
Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
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