Labour has confirmed it will introduce a policy to remove tax breaks on investment properties but aims to target speculators rather than small-time landlords.
Labour’s housing spokesman Phil Twyford has released Inland Revenue figures which showed property investors claimed $650 million in tax write-offs on residential rental properties in the year to March 2015.
His party now plans to crack down on negative gearing, which allows landlords to claim tax deductions on their rental properties.
Labour will consult on its policy to remove negative gearing over the next few months and was aiming for a design to capture speculators rather than longer term, small investors such as those using a rental as a retirement investment.
That included considering options such a cap on the number of houses negative gearing could apply to and grandfathering the policy so it did not apply to current landlords.
Twyford said the current housing bubble was a field day for speculators and steps had to be taken to squeeze them out of the market.
“Negative gearing is a massive taxpayer subsidy to speculators.”
Twyford pointed to a Crockers Property Investment Index survey which showed since 2014, the number of investors with four or more properties had risen to 29 per cent – up from 22 per cent in 2014.
“You can’t blame speculators for trying to make a dollar out of the current housing debacle. National’s policies are a virtual signpost that says: ‘Invest your money in property speculation, there’s a killing to be made.’
But the effect of this speculative mania is pushing house prices through the roof.”
The IRD figures showed individuals claimed losses of $440 million on rental properties they owned, trusts claimed $40 million in losses, partnerships claimed losses of $20 million by partnerships, companies $40 million and look through companies claimed $110 million in losses.
Last month the Reserve Bank announced it was lifting the loan-to-value restrictions on investors to 40 per cent nationwide in a bid to dampen speculation.
Labour leader Andrew Little left negative gearing out of the mix of housing policies he announced during Labour’s centenary celebrations last month but said the party would consult on the issue.