Auckland (The NZ Today)
ACT is promising another major tax change for property investors, saying landlords should once again be able to offset rental losses against income earned elsewhere.
Under current rules, losses from residential rental properties are “ring-fenced”, meaning they can generally only be used against rental income, either now or in future years.
ACT wants to remove that restriction for new losses incurred once the policy takes effect. That would allow a landlord making a loss on a rental property to use it to reduce tax payable on other income, such as wages or business earnings. Existing ring-fenced losses would stay under the current rules.
Leader David Seymour said the change would make the tax treatment of residential property more consistent with other forms of investment.
He argued the current system can leave landlords waiting years to use deductions at a time when cashflow is already under pressure.
ACT also says the policy could help landlords carry out repairs and make rental investment more viable, including for newly built homes.
The proposal would come at a cost to government revenue.
ACT estimates the change would reduce revenue by $264 million in the first year, rising to $303 million by year four, with the cost already included in the party’s fiscal plan.
Seymour said the policy would not increase the total amount of deductions available in every case, but would allow some tax relief to be used earlier.
The announcement follows the Government’s restoration of mortgage interest deductibility for residential landlords, another tax setting introduced under Labour and later reversed.
Labour has since said it would not restore those interest deductibility restrictions if elected.
ACT is framing the new policy as part of a wider push to lower costs for rental property owners and encourage housing supply.
Meanwhile, critics are likely to characterise it as another tax concession for landlords, while ACT argues renters ultimately benefit if landlords face lower costs and more homes are available.
Source: ACT Party policy announcement
