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Here is another interesting Wellington real estate related news article that we thought may provide you with helpful information.
The NZ Property Investors Federation has produced research which show property investors pay their fair share of tax.
June 20th 2018
Westpac Economist, Dominick Stephens, says that property is more lightly taxed in NZ compared to other assets. He quotes a Tax Working Group study to make this claim.
However financial consultants Morgan Wallace found large errors in the Group’s study and concluded that rental property is actually taxed more than other assets.
Officials agreed with the Wallace Morgan report. They said that if the study had treated other assets with a capital growth component the same way they treated rental property, then rental property would actually have a higher marginal effective tax rate because of local government rates. They told the NZ Property Investors’ Federation (NZPIF) that their study “is probably less well suited to comparing taxes across different real investments”.
At a recent meeting with the NZPIF, the Tax Working Group agreed that rental property is not undertaxed as their background report had claimed.
Stephens has also said that rental property has tax advantages over home buyers and that this has led to a reduction in the rate of home ownership since the early 1990’s.
Claiming expenses against taxable income is a tax law that exists for all. Rental property pays tax on gross income less expenses just like every other business or investment. Home buyers do not have an income stream from which to deduct their expenses. When buying a home they receive the benefit of accommodation.
The two situations are completely different. Just because a rental provider can claim expenses from their rental income, this does not make buying a property easier for them compared to a home buyer.
Stephens says that tax advantages for rental property caused home ownership levels to………….
Continue reading this article at the original source from GoodReturns.co.nz
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