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Articles by Matthew Gilligan

Sunday Rant...

AUTHOR: Matthew Gilligan

POSTED: 17 July 2011

Labour intend to ring-fence property losses to future property income. This will send thousands of investors broke fast. Take investors' tax refunds away, property values crash. This is well documented overseas. Sweden property values dropped 35% when they ring-fenced losses and the following government reversed the policy, with values immediately thereafter recovering.

Accountants would get a mountain of pre-change planning work and we would have years of work to do, while lots of New Zealanders will go broke with ring-fenced losses and insolvency revenue will grow too. I'm not going to sit by and have to charge my clients for work that is going to make them go broke. Labour, are you thinking this through?

I would not want to be a banker though with losses ring-fenced... it will make an already difficult environment treacherous and property investors would want to be selling sooner than later.

This really is playing with fire by Labour with little short-term upside given the global backdrop of deleveraging, and capital growth prospects in NZ with higher interest rates on their way (next year or sooner), and potential for major problems globally as Asia and Aussie come off the boil and Europe and the USA choke on their indebtedness. This must put pressure on interbank lending rates within 2 years, especially if we see sovereign default in the PIIGS or USA.

The massive bureaucracy they built and squandered our money on, the buy back of KiwiRail, now Capital Gains Tax, to name but a few blunders.

Back on Tax

If you want instant cash flow targeted on property - it's simple. Introduce stamp duty like the rest of the world. Instant 3- 5% tax on the turnover in the property sector dampening speculation and raising major government revenue, without the complexity of CGT.

If you are worried about ring-fencing of property losses, we are here to help - email info@gra.co.nz, phone +64 9 522 7955, or come and see us.

Request a Meeting

Matthew Gilligan
Managing Director and Property Services Partner

09 522-7955

mg@gra.co.nz

© Gilligan Rowe & Associates LP

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