Misleading talk will lead to bad tax decisions

NZPIF says deputy commissioner of Inland Revenue Robin Oliver confirmed back in 2007 that rental property does not have a tax advantage over other investments or businesses.  

When asked by a government select committee if there were some tax advantages for investments in rental housing, Oliver replied that "the short answer is there is none".

"Rules about expenses for deducting costs such as interest, upkeep and maintenance, as well as paying tax on income were the same for investments in shares or anything else. In fact under the housing case, the capital gains boundary is brought back a bit. There are tighter rules to what is a capital gain."

Many businesses make a loss during the first few years while getting established and rental property is no different. The rental market is extremely competitive and tenants enjoy lower rents because of this, helping them to save for a deposit on their own home.

The NZPIF is also concerned about the belief that rental property owners actually reduce the level of tax available to the government by $150m has been repeated so often that it is now thought of as a fact.

"The often quoted figure is an anomaly that occurred in 2008 when interest rates were at their peak, making it extremely difficult to provide rental property. However with lower interest rates rental property will once again return to be a net payer of tax. To suggest that rental property owners are not paying their way based on one very difficult year is grossly misleading," NZPIF said in a statement.

Another point often raised by rental property opponents, is that the rental industry is not part of the productive sector. This shows little understanding of what it takes to make a country productive.

Rental property owners house around a third of New Zealand's workers. Without access to decent housing, these workers would be considerably less productive.

Rental property owners also contribute to the general economy through supporting banks, local councils, tradespeople, professionals, hardware stores, insurance companies and a host of other businesses.

"Any tax applied solely to rental property would not level the playing field, it would distort it," NZPIF said.

"Rental property does contribute to the tax system and it is definitely part of the productive sector. To suggest otherwise is completely misleading."