Labour to end home tax break
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.
‘‘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 handout from taxpayers to speculators. It gives them an unfair advantage over Kiwi families.’’
Under the proposed change socalled ‘‘mum and dad’’ investors who bought rentals as a long-term investment would not be affected as most of them did not use the loophole, Little said. Those that did would have time to adjust.
‘‘This policy is about the big speculators who purchase property after property. It’s about those big-time speculators who are taking tens of thousands of dollars a year in taxpayer subsidies as they hoover up house after house.’’
New Zealand could not defend handing out subsidies to property speculators when most young couples could not afford to buy their first home, Little said.
The change would save about $150 million a year once fully implemented, with the money being diverted to Labour’s healthy homes policy.
Homeowners and landlords would be able to get up to $2000 towards the cost of upgrading insulation to modern standards or installing heating. Over a decade, that would add up to 600,000 homes, costing $1.2 billion.
Property Institute of New Zealand chief executive Ashley Church labelled the tax crackdown a cynical electoral ploy that risked slowing housing supply.
‘‘Your typical property investors are average mums and dads – not wealthy cigar-smoking fat cats – and their ability to purchase an investment property is usually leveraged against the equity in their home and their ability to claim losses in the early years, like any other business does.
‘‘This move would certainly stop them investing – but in the process it would quickly lead to a shortage in rental housing which would fall back on the Government – so it would end up costing the taxpayer a lot more in the long run,’’ Church said.
Church also strongly rejected Little’s claim that Labour’s policy would ‘‘create a level playing field for home buyers and help families get a fair shot at buying a place of their own’’.
Little was introduced by wife his Leigh Fitzgerald, who has largely stayed out of the public eye since Little won the Labour leadership.
Fitzgerald said they met when she asked for advice on her employment contract.
And she revealed her husband called home twice a day, ironed his own shirts, but often showed characteristics of his star sign the Bull.
In his speech, Little referred to Fitzgerald as his soulmate, and said they had lived the ‘‘typical Kiwi story’’, buying their first home in 2000.
‘‘That first house we bought in 2000 cost us $315,000. That wasn’t a small amount of money for us, but it was manageable. ‘‘
The same house was now worth $830,000.
‘‘Its value has nearly tripled. But here’s the thing: Families’ incomes haven’t tripled since 2000. Nowhere near. That’s why housing is getting further and further out of reach.’’
Little also reiterated Labour’s other pledge to build tens of thousands of affordable homes in the biggest house building programme in decades.
And he said Labour would introduce a ban on overseas property speculators.