Thursday, June 28, 2007

Cullen's latest idea

Some time ago we had a rental property which we’d bought in a moment of madness and regretted forever after. According to the wisdom of the person who advised us that buying the property was a good idea, we would not only earn a profit on the rent paid, but be able to claim against our taxes for a number of things, including depreciation, rates, insurance and the like.

For us it was never much of a deal. We came into the property market at the wrong time, and eventually sold at a loss. That’s the way it goes in some businesses.

But I see now that Michael Cullen, our esteemed Minister of Finance, is considering removing many of the tax breaks landlords receive. That would be scary for an awful lot of people who rely on that extra income at tax return time. It’ll be particularly scary for those who own only one or two rental properties. (The only way to make big money in the rental business is to own a number of properties, so that the losses in rent are compensated for by the gains.) And I suspect there’ll be a sudden rash of rental property sales on the market, which will possibly reduce the value of housing, and will also decrease the number of rental properties available.

No doubt Mr Cullen in his wisdom knows what he’s doing, but I for one am glad I’m well and truly out of the rental market.

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