RESIDENTIAL RENTAL PROPERTY- FEATURES AND TAXATION
capital appreciation ( not guaranted but occurs more than not)
no capital gains tax- unlike Australia or the UK, New Zealand has no capital gains tax. Wealth, profit or estate equity created through personal or business investment is not taxed.
no interest clawback
no wealth or death duty- unlike many other countries, New Zealand has no indirect taxes on wealth. Inheritances on death can be passed to beneficiaries without estate duties applying.
personal tax rate- New Zealand has low personal tax rates compared to other countries.
no limit on losses available
stable government policies
allows easy entry into the Investment Property owning field
provides a service which has a high demand
is the best security for lenders
it is easy to spread your risk over several properties with several points of income
it provides instant and consistent cash flow
it protects the value of your investment (hedge against inflation) assuming property values increase at rates equal to or higher than inflation
it provides an asset that is easily tradeable
it is not time consuming
many taxpayers derive more satisfaction and feel more comfortable with an investment which is bricks and mortar and which they can see, touch and take pride in as opposed an investment with a certificate.
only rental earned is treated as assessable
capital gain (the excess of sale price over original cost) is not treated as income
can claim all costs involved
the opportunity to keep the property in good repair and claim these costs throughout the years which may improve the resale value
no interest clawback when the property ceases to be a rental property
if there is a loss (i.e. expenses higher than assessable income) this can be deducted against other income earned by the taxpayer which will reduce the income tax liability if a structure is set up to allow this.
interest on borowings
loan repayment insurance
body corporate fees
heating and cooling
rubbish disposal costs
any other relevant costs
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