Calls for earthquake strengthening costs to be depreciable
Friday 16 September 2011
A Dunedin property investor is lobbying the Government to change its tax laws for earthquake strengthening to make the work depreciable.
By The Landlord
Ted Daniels owns a portfolio of heritage buildings and says the expense of earthquake strengthening has been a nightmare.
At present earthquake strengthening work is deemed a capital expense and therefore not tax deductible or able to be depreciated, he says.
Daniels, who has renovated several central Dunedin buildings and is currently restoring two historic Princes Street properties, wants the Government to change this law and make the work depreciable.
There were no incentives for landlords to earthquake strengthen their buildings, Daniels says.
"It does not make your building more valuable or get more rent from your tenants. In the long run it is probably better because tenants will probably stay but for every building it is different. It is not straight forward."
He believes more heritage building owners would earthquake strengthen their buildings if the Government changed the tax code to allow the work to be depreciated.
"It will be good for the whole of New Zealand. If there was another earthquake and people have strengthened their buildings the amount of people losing their lives will be a lot less."
He argues it would be more cost effective for the Government to give a bit now rather than when it is too late.
While he wanted to see more action from the Government he praised the Dunedin City Council for its policy of not charging consent fees to earthquake strengthen buildings.
Daniels is passionate about maintaining heritage buildings but fears people will give up on restoring them if costs get too high. Already he knows of Dunedin developers who have opted to knock down heritage buildings and replace them with carpark buildings because the revenue is better.
"I have to be passionate about it because they are not the easiest buildings to work with but at the end of the day the satisfaction that you have is rewarding," Daniels says.
A spokesman for Chris Finlayson, Minister of Arts, Culture and Heritage said the Government will not be changing the rules.
"The fiscal cost of allowing deductions for earthquake strengthening work throughout New Zealand would be very high. It is not a policy that could be applied to only one region, since many areas of the country are earthquake prone, and require earthquake strengthening.
"Earthquake strengthening work is seen as bringing an enduring advantage or an increase in an asset's value - it has been considered by the Courts and in both cases, the expenditure was held to be capital in nature," he said.
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