ACT to abolish another of Labour's renters' taxes

“ACT is campaigning to reverse another of Labour’s renters’ taxes by abolishing loss ring-fencing for rental properties,” says ACT Leader David Seymour.

“Median weekly rents rose by $180 during Labour’s time in government. Labour claimed it was helping renters, then made it more expensive to provide the homes they live in.

“There’s no such thing as a tax on landlords that renters can safely ignore. When Labour made rental housing more expensive to provide, tenants faced the consequences through pressure on rents, fewer homes, less choice, and poorer quality.

“ACT will allow residential rental losses incurred from the day the policy takes effect to be offset against other taxable income. This will apply to existing homes and new builds. Losses already ring-fenced will remain subject to the existing rules.

“If you’re a sole trader or make other investments, such as commercial property, your losses can be offset against your personal income. ACT’s proposal levels the playing field and ensures treatment is consistent.

“Labour’s policy meant legitimate losses could not be offset when cashflow is tightest, forcing landlords to wait until a property became profitable – when cashflow relief is needed least. If cashflow is tight, it’s much harder to carry out essential repairs if the tax deduction is delayed for years.

“The only way to secure more affordable housing for renters is to build more homes and reduce the costs that get passed through to renters.

“Removing ring-fencing will improve the viability of rental investment, including investment in new homes. Alongside ACT’s resource management reforms and opening up access to new building materials, it will encourage supply and give renters more choice.

“Expect the usual cries of ‘tax cuts for landlords’. Labour played the same cynical game when the Government restored mortgage interest deductibility, yet with ACT in Government and rents flatlining, it's renters who have reaped the benefits. Nearly three years on, Labour has come to its senses and decided not to reverse ACT’s change.

“Our policy brings tax relief forward for losses that would eventually be deducted under the current rules. It doesn’t increase the total deduction. But some losses may never be used, and earlier deductions reduce government revenue in the meantime. So, we can’t say the policy has no fiscal cost.

“We estimated the cost by reversing the impact of the rules when the Government introduced them, consistent with Treasury’s approach.

“The policy is forecast to reduce government revenue by $264 million in year one, rising to $303 million in year four, and is accounted for in ACT’s fully-costed fiscal plan.”