397,000 kiwi families currently live in homes rented from private landlords.
There are 189,100 individual landlords who own rental properties. Obviously most own one but some own many properties but it averages out to about two.
The total projected revenue from eliminating the depreciation write off is $1.3b. That involves housing rentals, industrial and commercial. Depreciation on housing is pretty much a fiction. It is real on most industrial and some but not all commercial buildings.
The average is $3,274 per rental property.
There is currently a tight housing rental market in New Zealand and especially in Auckland. The tightening up of the tax approach around property owners liability for tax on capital gains is already pushing some landlords out of the market and causing rents to go up. Both TV channels have reported on this recently.
Landlords are making it clear that it is their intention to recover their extra costs (write off forgone). Of course they won’t be able to do it overnight – but they will over time.
My calculation is that the average residential rental property will inolve a loss of about $45 to the landlord v current depreciation arrangements.
(Average house price 416k but I’ve used median 360k. 2% depreciation = $7,200. 33c tax rate = $2,400 say $45 per week)
Can John Key guarantee that all families that rent their houses and get this increase as well as that in their GST will not be worse off.
And what does Bill English say. His rent was paid by the taxpayer for years because he declared Dipton as his primary residence when he lived in Wellington.
But most of all who thinks it is fair that rents go up to give tax cuts of hundreds of dollars a week to the highest income earners in the country.
Not me.
Update Comments below have suggested that my estimate is high because I haven’t taken out land prices. Other emails have suggested that there are higher depreciation rates and that because a proportion of rented premises are apartments land is not quite the issue some suggest. I’m happy to use the property investors $34/week figure for the purpose of the discussion. The post goes to the principle.
