How do I submit an offer on a house?
When buying a home it is important to remain rational and to do your homework. A house is worth the maximum......
It’s not the easiest time to be a Landlord right now. 484 Landlords are potentially in hot water over their failure to insulate their investment properties. New tax changes have also meant that losses from owning a rental can no longer be claimed against direct income and must be deferred forward.
With this double whammy, it’s fair to ask whether the staple Kiwi rental property is still a good investment option.
The Law Changes
On July 1 this year legislation passed by the previous National government came into force which means all investment properties must have underfloor and overhead insulation - with the only exception being properties where the installation was not practical.
Landlords have had a three year grace period for installation but the insulation industry is at maximum capacity with estimates of as many as 100,000 investment properties are yet to be insulated. Failure to insulate allows tenants to claim up to $4,000 directly from their landlord and thus far at least 44 disputes have been lodged with the tenancy tribunal.
On the taxation side – previously if landlords had spent more on the cost of owning property than was earned in rent, the shortfall could be deducted against their personal taxable income. In the 2016/17 tax year, 116,000 landlords declared such a loss. Now, this loss can only be carried forward to be deducted against a profit made in the future.
Being reliant solely on tax laws for an investment to stack up is not likely to provide long-term stability when investing. Rising rental prices in the Wellington region will protect many landlords from negative gearing changes but some will be caught out.
Is now a good time to invest in property? The truth is it all depends on your personal circumstances. There is no magic yes or no answer that will always apply and every individual is different!
We’ve talked before about other investment strategies ($10,000 invested in 1971 in NZ property would be worth $570,000 at the end of 2017 vs. $1.35m if invested in global shares) and believe now is a great time to have a discussion about your own investment options to see if they are working for you as best they can.
If you would like to review your investment options with one of our advisers, please email firstname.lastname@example.org to arrange a meeting.