From NZ Herald · · 2m
National won't back Act's tax relief policy for property investors
National rejects Act's proposal to give residential property investors tax relief through negative gearing.
In brief
National rejects Act's proposal to give residential property investors tax relief through negative gearing. National opposes Act's policy to allow residential property investors to use losses against taxable income, prioritizing fiscal surplus over immediate tax cuts. Originally reported by NZ Herald.
National's stance on Act's policy
National's finance spokeswoman Nicola Willis stated they don't support Act's policy to give residential property investors tax relief through negative gearing.
“I don’t support Act’s policy”
Act's negative gearing proposal
Act proposed allowing residential property investment losses to reduce other taxable income, such as wages and business income.
Tax relief example
An investor with a $10,000 loss and $100,000 salary would pay tax on $90,000 of income under negative gearing.
Current tax rules
Under current rules, investors cannot deduct losses and pay tax on full income without offsetting losses.
Act's rationale
Act argued negative gearing would attract more investors, increase rental supply, and put downward pressure on rents.
National's priority
Willis stated National will prioritize fixing the country's finances before adjusting tax brackets for inflation.
National's next steps
National plans to focus on business growth and worker incomes once the country's finances improve.
Loss ring-fencing rule
New Zealand introduced a loss ring-fencing rule in 2019 that prevents owner-occupiers from offsetting interest expenses against taxable income.
Act's cost estimate
Act estimated its policy would cost the Crown $246 million in the first year, rising to $303 million in the fourth year.
National's position on fairness
Willis declined to comment on whether Act's proposal for negative gearing is fair.
Australian comparison
Australia recently introduced a loss ring-fencing rule similar to New Zealand's with an exemption for new builds.
Inland Revenue data
Inland Revenue reported 163,050 investors carried forward $2.8 billion of losses from the 2024/25 tax year.
Act's tax policy focus
Act is campaigning to make KiwiSaver returns tax-exempt, not to provide immediate tax cuts.
National's fiscal stance
National believes the country's finances are not in good enough shape for income tax cuts.
Act's policy impact
Act's policy could reduce property investors' tax bills by about $300 million annually.
What happens next
National will focus on fiscal surplus before implementing tax relief measures for investors.
The one thing
National opposes Act's policy to allow residential property investors to use losses against taxable income, prioritizing fiscal surplus over immediate tax cuts.
