Proposed tax changes are set to scrap tax rebates on negatively geared property investments.
No longer will New Zealanders enjoy tax rebates on the losses of their negatively geared investments.
Once finalised, it is expected that the laws will be backdated to April 2019.
But what exactly does this mean for you and property investment in New Zealand?
At Goodlife, we see these tax changes as a new opportunity to gain financially – if you invest wisely.
So what is negative gearing and how does it differ from positive gearing?
With negatively geared properties, the rental income does not cover the costs of the property thus generating a negative cash flow. In essence, the property runs at a loss. In the past, those losses could be claimed as a tax deduction.
A positively geared investment generates more income than the expenses of owning and managing that investment. As the owner is making a profit, tax is paid on the property.