Labour lines up property speculators
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.’’
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 $150m 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 $2,000 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.
Finance spokesman Steven Joyce said the announcement was a rehash of Labour’s 2014 housing policy and would have the opposite effect on first home buyers.
‘‘It will simply put up rents and probably reduce the amount of construction in the housing sector.’’
What Labour was proposing was effectively a new tax and ‘‘any time you put a new tax on any sort of sector that sector reacts by slowing down.’’