Bach owners think tax change fair

23:30, May 24 2012

A Budget change to tax deductions for holiday homes is seen as fair enough by Marlborough Sounds bach owners.

Bach owners have been able to claim 90 per cent of their general bach costs, even if it is rented out for only a fraction of the year. Under the new tax rules announced in the Budget yesterday, owners will be able deduct only the proportion of money the bach is rented for - if rented for 30 per cent of the year, a claim of only 30 per cent of costs is allowed.

Revenue Minister Peter Dunne labelled the existing deduction unfair because owners could claim deductions for most of their costs even if the property was mainly for personal use. The change is expected to save about $109m over four years.

Marlborough Sounds bach owner Jonathon Coats said he thought the change was "pretty fair".

"It's a good thing. Quite a lot of people set their holiday homes up as a rental and just use it themselves, claiming all deductions. The change isn't all that onerous."

Wellington's Johnny Young said he thought the change would knock about $500 off his tax deduction but he is not fazed by the closure of the loophole.


"I think it's fine, I try to work it out pretty close to what it is anyway - four months rented, four months for us and four months vacant."

He was surprised by the amount of money the Government thought they would get by the change.

"More people are renting out their baches. It happened about two years ago with the recession and people were struggling."

Mr Young has a bach in Kenepuru Sound and said in the last two years the number of people renting out their properties had doubled, meaning legitimately they would be able to claim more under the new tax rule.

Tom Stein, of Mahakipawa, also considered the change reasonable.

"We are perhaps a little unusual in that we rent our bach all the time as we live next door. So we can still claim the maximum.

"But I think there are plenty who don't rent their baches out ... and make the claim – getting something for nothing."

The Marlborough Express