Offshore investors are aggressively exploiting tax breaks to pay no tax on their rental properties according to IRD data released by Labour’s Housing spokesperson Phil Twyford.
“35% of offshore investors are paying no tax on their properties, and are pocketing tax breaks of up to $100 million a year,” says Mr Twyford.
“This is a racket. New Zealanders get up every morning, go to work and pay their taxes while these investors are pocketing hefty tax breaks to subsidise property speculation.
“It makes no sense that 23,000 foreigners with New Zealand properties reaped $100 million net rental income for the March 31 2015 year, yet paid only $17 million tax on that.
“IRD data released under the Official Information Act shows investors pocketed $650 million in tax write offs over the last year which – along with skyrocketing house prices – has turbocharged the speculative frenzy in the real estate market.
“Now we find that offshore speculators are exploiting those tax write-offs aggressively. The average offshore speculator pays just $478 in tax on their rental properties per year compared to $818 per year for New Zealand-based landlords.
“Andrew Little has signalled that Labour will shut down the ‘negative gearing’ tax breaks that allow investors to write off their losses on rental properties against other taxable activity. These tax breaks are fuelling the speculation that is a big factor in the housing crisis. It makes even less sense for the Kiwi taxpayer to be subsidising offshore speculators,” says Phil Twyford.