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Ele Ludemann writes –
Contrary to what many headlines and news stories are saying, residential landlords are not getting a tax break.
The government is simply restoring to them the tax deductibility of interest they had until the previous government removed it.
There is no logical reason for treating the leasing of houses differently from any other business which is able to claim interest as a tax deductible expense.
Headlining stories and reporting the reinstatement as a tax break is possibly politically motivated and definitely wrong.
Is it any wonder trust in media has declined?
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This article by Ele Ludemann was first published on Homepaddock.
Point of Order 
Sigh… Just because the landlords have held a relative tax advantage in the past over every other business is not a reason to keep a economically stupid tax exemption.
Gordon Campbell puts the economic issue clearly
Basically Luxon and his economically challenged dimwit minions have just given a few highly leveraged landlords a massive handout of about 2.8 billion dollars over the next few years and much more ongoing into the future.
Ultimately this will come out of everyone else taxes, either because they get a reduced tax cut, or because (as seems increasingly likely) this coalition winds up increasing taxes directly or indirectly. Like the rate increases that are coming through this year, the raising of taxes on vehicles, and the many more that I am expecting this pack of economic idiots will put into place
Is this going to reduce rents – hell no. That is a line of complete bullshit that is sufficient for economic illiterates (queue Mike Hosking – the simpleton who likes to swallow any line for his wealth collection drive).
Rents are made on local market values. Every landlord I know takes on new tenants at what they think is the local market rate for the rooms that they have and the property quality. They only drop it if they can’t get tenants to bite quickly.
This is what the market rate is…. It is the balance between the avarice of landlords for profit and the ability of tenants to pay.
You only have to read the Treasury/Reserve Bank/Housing report on economic drivers of rentals to see the macro trends? It is completely unrelated to costs. It almost entirely driven by the ability of households income, and their inability to buy their own property – mostly because they are having to pay rent and your tax obligations.
But I’m guessing that you are a landlord. You have the sanctimonious hypocrisy that seems to be inherent.
Tell me – are you going to drop your rents? Or at best, just leave them where they are over the next 5 years. Of course not… You’ll raise the rents to the local market rate next time you need new tenants. You might not raise the rent for good tenants initially, but eventually you’ll hike it to the point that your current tenants cannot pay because of job losses, retirement, or illness and effectively turf them out by raising the rent.
With this windfall, you’ll either take the profit or almost as likely will buy more property because that way you can reduce your profits and pay less tax because you have tax deductions on interest. Effectively throwing the costs back on to the taxpayers who don’t have your special tax break.
That tax break was put in originally in the middle of last century because it encouraged private landlords to provide housing about the affordable state housing levels.
Basically if landlords want to keep the two tax exemptions, we need to revert back to the economic conditions that made it viable. We need to build more affordable housing, ideally state built, so that it provides a competitive base to rents.
Otherwise it is going to be capital gains and/or wealth taxes to limit the incredible economic distortion of the current rental/housing market.
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