With the swearing in of our new government now completed, our attention now turns to the likely changes we will see resulting from that.
No major statements of Tax policy have been made in the days since the coalition was announced. But we can see from the pre-election policy statements that changes will be coming.
A lot of the focus has been on taxes as they relate to the ownership of property, suggesting that tax measures can be used to deal with the issues of housing supply and affordability.
Labour’s tax plan in their pre-election policy included:
- Extending the two-year bright line test to five years.
- Limit the ability of property investors to use losses against other income. We don’t know full details of this plan, but expect it will essentially be a “quarantining” of those rental property losses, allowing them to be offset only against rental income.
- Create a tax working group. One of the key questions facing this group will be Capital Gains Taxes on property. While this was originally part of the Labour Party’s pre-election platform, they backed out on implementing this in their first term, instead promising that any CGT option would take effect only from after the next election.
While NZ First campaigned on a platform of limiting foreign ownership of NZ property, the coalition agreement limits the promises in this area to strengthening the Overseas Investment Act and creating a register of foreign owned land and housing.
It remains to be seen how effective these measures will be. We suspect Kiwi’s love affair with property as an investment asset will continue, and issues of supply and affordability will be with us for several years to come.