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Proposed tax changes will hurt listed commercial investorsThursday 4 February 2010 Listed commercial property will be hurt by proposed tax changes, both in terms of returns for current investors and the ability to attract overseas money. The country's largest listed commercial landlord AMP NZ Office Trust (ANZO) has expressed concerns over the impact of two recommendations included in the recent report by the Tax Working Group, including the removal of building depreciation and the introduction of a land tax. It says if either proposal was adopted it would have a negative impact on the near-term stability of earnings and investor distributions for ANZO and other listed and unlisted commercial property entities. ANZO itself predicts its earnings "would be reduced by approximately 8% to 10% in a worst-case scenario," where the depreciation allowance was fully abolished, ANZO chairman Craig Stobo says. There is also potential impact from the proposed land tax, as the most likely outcome is that this will be passed through to building occupiers, many of whom do not have the ability to absorb new costs in the current economic environment, Stobo says. He says older investors, who favour the steady returns from listed property trusts, would be particularly hard hit. "Listed property is an investment which is particularly popular with older investors, who are already finding it tough in this economic environment and depend on regular income from their investments," he said. The moves will also dent New Zealand's ability to attract capital from overseas investors. "New Zealand's relative competitive position on the global stage and ability to attract capital from overseas investors will also be diminished by any new taxes that are imposed." Shares of ANZO have slipped 5% since the Tax Working Group report was released on January 20. In the past month, the NZSE Property Group Index has fallen 3.5%, making it the third-worst sector on the exchange, ahead of telecommunications and mining.
Comments from our readersOn 5 February 2010 at 8:29 am B.G. Fuller said:
Poposed tax changes for listed properties. Well many were robbed of their life savings by Finance companies and many more by the likes of Blue Chip. Why not carry on hitting those few people left with some money to invest. I rely on listed property trust income to keep me away from WINZ. Mr. Key and all your cronies - you are looking in the wrong places for extra tax. Add your comment:Buyers cautious as activity remains subdued House prices extended their decline for a fifth month as a backlog of unsold property sits on the market. Review may give investors some depreciation relief Commercial and industrial property investors should still be able to claim significant depreciation allowances, an asset depreciation expert says. Economist pushes out dates for next OCR hikes One economist has pushed out the date for the Reserve Bank’s next official cash rate hike citing recent downgrades to its forecasts for global GDP growth, including in Australia and New Zealand. |
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