New Zealand Property Investors Nervous New Tax Laws

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New Zealand Property Investors Nervous New Tax Laws

  • 15 Apr, 2021

What do I do about the new tax changes to my residential investment portfolio?

I took a call earlier today from a property investor, asking me, how will the new tax laws affect me? Continuing, he said, “I am angry. I voted for Labour and they have lied to me. I have worked hard to build my retirement fund. (Meaning his portfolio of investment properties) and now they want to tax me on it” He continued, it makes me think twice about the new bathroom I was going to put in, on a rental property. I would have to get a loan to complete the renovation. But that makes me reluctant to do anything”

How am I going to manage all the new tax changes, will it cost me more with my accountant to manage all the new tax changes. What can I do about the new tax changes to my investment portfolio. I am confused about what to do next with my residential property investments.

This is a typical conversation I have had with many New Zealand Property Investors. They are confused and anxious about what the new tax laws will mean for them. Property Investors, take a calculated risk, which we work out for you, so you know what the bottom line on your investment is going to be to invest into a market to provide passive income for themselves in retirement, rather than relying solely on the Government. The retirement pension for a couple in New Zealand is;

 

Standard NZ Super Rates (for tax code M)
Qualifying as Weekly rate Annual rate
Single: living alone $437 $22,721
Single: sharing $403 $20,973
Married, civil union or de facto couple: one partner qualifies (and the other is not included) $336 $17,478
Married, civil union or de facto couple: both partners qualify $672 $34,955
Married, civil union or de facto couple: one partner qualifies and the other is included* $639 $33,225

 

Source: Ministry of Social Development

Does the Standard New Zealand Super Rates, get you excited or worried. What kind of lifestyle do you want during retirement. How much income at retirement do you want or need to continue a similar lifestyle that you do currently? These are some of the first questions I ask first time investors, and usually they have not given it much thought. In all the years I have been helping people get on the property ladder, there was only one, that knew about much income they wanted at retirement. How do I work out how much I will need at retirement, how does all that work? Daily, I am asked this question.

Property investors get on the property ladder to create passion income and security for retirement, or how to help their children onto their first home. As a result, property investors provide homes to renters. 40 per cent of New Zealanders are renters (source NZ Herald). The Government cannot provide that amount of housing for New Zealanders. It is that simple. The question remains, what do I do about the new tax laws for New Zealand investors, like most business, and property investing is a business, it should be set up in a Company or Trust, correctly to maximise returns and minimise risks. Get advice from an Accountant, who is an Investment Property specialist. If your Accountant that you have currently who does all your work for you, is not an Investment Property Specialist, seek one who is. It is worth the investment.

Getting on the property ladder is one thing, being able to progress up the property ladder is another. Many New Zealander property investors, typically only end up owning one or two investment properties. Ensuring that you have everything set up correctly and using professionals to help you get through and navigate obstacles as they arise and the rules and tax policies change, just like any business investors need to be able to move with the current rules and maximise these to their advantage. And any sports team will have a coach, if you want an investing coach, if it is your first property or the second, third or more. It is always easier when you know someone is on your team for you.

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