Now that the dust has settled on what was one of the most anticipated budget announcements in recent memory, now is time to reflect on the impact of the announced and proposed changes on property investors. In doing so I am going to focus on the specific impact of the tax changes and leave aside for the moment the wider macro effects of the impact of this budget on the economy. Broadly speaking there are five areas where the tax changes will impact on property investors. They are as follows: \n \n The drop in personal marginal tax rates; \n The removal of depreciation claims on buildings; \n Proposed changes to the LAQC regime; \n Raising GST to 15%; \n Extra funding for audit activity at the IRD. \n \n For advice on how the changes impact you contact us. \n Depreciation vs Tax Cuts \n Let’s take an example of a typical property investor that has taxab...
\n \nBOOM OR DOOM ? \n \nNo doubt you have been reading in the newspapers and listening to the media various reports reviewing what is going on in the property markets; highlights of the reports are both positive and negative, and you hear various opinions around the marketplace about what 2010 is going to hold for us. \n \n \nPositives \n On the positive side:- \n \nWe have low floating interest rates, the five year rates have firmed up and are now declining, signalling that the cost of funds for the long term rates will fall. ( Don’t fix for 5 years at present, just float your interest rates….your blended cost of capital will be lower if you float at present than fix for 5.); and \n \n \n \n We have positive net inflows from immigration annualising out at the time of writing at around +19,000 as a net inflow annually, indicating more housing demand in the wings, and \n ...