The Government recently announced a new tax incentive targeted at build-to-rent developers – and ‘mum and dad’ property investors aren’t happy. The new bill gives these developers an exemption from the tax deductibility limitations that are placed on most private landlords. Private landlords feel this new regime is unfair, according to Stuff. However, these build-to-rent
Earlier last year the Government announced a number of measures designed to make the housing market more accessible to first home buyers. Changes to the tax system, in particular, were proposed to counteract the perceived favourable conditions for property investors. The first key change was the extension of the bright-line test for taxing profit
With all the changes the government has introduced to residential property investment, is now the right time to sell your rental property and cash up? We look at the reasons to exit the market – and the reasons to keep holding. Although property prices rose by over 30% in 2021, the predicted flatten out or
The Government has confirmed that they intend that new builds will be exempt from the proposed new legislation for removing deductions for interest on residential rental properties. However, this is subject to Parliament passing the proposal into law. What is Classified as a New Build? A new build will be defined as a self-contained residence
The first compliance date for rental properties to meet the new healthy homes standards was 1st July 2021. Private rentals must meet the 5 healthy homes standards within 90 days of any new or renewed tenancies which began on or after that date. New consumer credit laws came into effect on 1st
Does the bright-line test apply to the sale of shares in a company? We take a look at a case study that explains this scenario. In April 2018, Rhys acquired 65% of the shares in QRS Ltd and at that time the company acquires an apartment block and the land it is built on. Those
The Government has confirmed that new builds will be exempt from the planned changes to the tax treatment of residential investment property. The intention to limit the deductibility of interest on residential investment property will not apply to new builds. At the time of writing, no legislation had been drafted, however indications are that
Buying or selling a business or a commercial property? There are new purchase price allocation rules you should be aware of. When land and buildings or a business is being sold, allocation of the purchase price between the business assets can result in different tax implications for the buyer and seller. In some situations,
The recent changes to the bright-line test have been in the spotlight in the past few months. Here are some bright-line test important points to note regarding the changes. Where a company owns a residential property and this is either subsequently set up as a Look Through Company (LTC) or disestablished as a LTC, this
The bright-line test’s main home exemption rules have been amended for residential land acquired on or after 27 March 2021. From that date the exemption rules will not be applied on an all-or-nothing basis for those property purchases, but instead the exemption will apply only for the period during which the property is actually used
It's becoming more common for a residential property to have several owners as this can significantly help with financing the purchase. It does, however, raise questions in regard to the bright-line test when acquiring property from co-owners. Here we look at whether the bright-line test applies in the scenario where a part owner of residential
As part of the government’s proposed changes to claiming interest deductions against residential property income, the interest deductions for rental properties acquired on or after 27th March 2021 (other than for new builds – but yet to be confirmed) will not be permitted from 1st October 2021. If money is borrowed on or after 27th
The Government has announced its plans to make the housing marketing more accessible for first home buyers. One key change is the proposed removal of deductions for interest on residential rental properties. The rules will apply to all investment properties other than potentially new builds. These rules have not yet been finalised and the
The government has announced the changes it is introducing to make the property market more accessible for first home buyers. One of these major changes is the bright-line test extension, which is doubling from 5 years to 10 years. The bright-line test taxes profits from the sales of residential property if they are sold within
The bright-line test taxes the sales of residential properties which are sold within five years of purchase (or two years of purchase if the purchase occurred between 1st October 2015 and 28th March 2018 under the original bright-line test rules). Here we look at whether the bright-line test applies to the sale of bare land.
Landlords should be aware of new Residential Tenancies Act law changes that took effect on 11th February 2021. These include: It will not be possible for landlords to end a periodic tenancy without cause by providing 90 days’ notice. Instead, landlords will have new termination grounds and different notice periods for periodic tenancies. All fixed-term
Are you confused about the rules regarding deducting low-value assets on rental properties? Let’s take a look at the scenario where rental property owners have made improvements to the property with low-value asset purchases. They have added insulation in the ceiling and installed an extractor fan in the external wall of the bathroom. The government
The new healthy homes standards became law on 1st July 2019. These standards require residential rental properties to meet specified standards across areas including heating, ventilation, insulation and drainage. The deadline for landlords to provide a compliance statement for meeting the healthy homes standards has now been extended from 1st July 2020 to 1st December
Our previous article “Ring-fencing Of Residential Rental Property Losses” explained what these rules are and the circumstances under which they apply. Now we take a look at these residential ring-fencing rules and mixed-use assets. A common mixed-use asset scenario is where a person owns a rental property that is rented out for short-term accommodation as
From time to time there may be a change in circumstances to a rental property that is classed as a “change in use”. For example, a property may be rented out to tenants for part of the financial year, and upon moving out the owner moves in and uses it as their main home. This
A person may elect to apply the residential property loss ring-fencing rules either on a portfolio basis or on a property-by-property basis. Here we discuss and explain how the ring-fencing rules apply under each method. Portfolio Basis Unless a taxpayer elects otherwise, the loss ring-fencing rules will apply on a portfolio basis. This means that
The new ring-fencing rules of rental loss apply retrospectively from 1 April 2019 for the 2019/2020 and later income years. Inland Revenue issued an official paper entitled “Ring-fencing rental losses” in March 2018 outlining the proposal to ring-fence tax deductions on residential rental properties so that they could not be used to reduce tax on
Renting out your home, rental property or holiday home for a short-term period can be a great way to make some extra income when you’re not personally using those properties but don’t want to lock in long-term renters. Airbnb, Bookabach and other online accommodation companies make it extremely easy to list your property as they
If you own a rental property or are looking to invest in one, it’s worth understanding the different rental property expenses you may be able to claim to help lower your tax burden. Rental Property Expenses Which Are Tax Deductible Legal fees incurred during the process of purchasing the property. Accounting fees for the ongoing
Earlier this year the bright-line residential property rule was extended from two years to five years. The original two-year period still applies to properties purchased between 1st October 2015 and 28th March 2018, and from 29th March 2018 onwards the five-year bright-line test now applies. There are three main exclusions to the bright-line test: Family
Back in October 2015, the IRD introduced the bright-line test for taxing the sales of residential properties. While the concept of taxing residential properties sold within two years of acquisition is straightforward, in reality there are often a number of factors to consider. Here we provide some examples to illustrate the bright-line test in practice.
We explain how seeking expert advice when planning to subdivide your property can make a big difference to the outcome. We met with a young couple who were considering their options around developing their family home property into four lots. They were living in a two-bedroom house on the front of their section. The back
If you are purchasing or selling residential property, you should be aware of the implications of the newly-introduced Bright-line Test for taxing capital gains. In this article, UHY Haines Norton’s Jim Martin clarifies the rules of the Bright-line Test and the transactions it will apply to. Under the 2015 Budget, the Government has introduced the
