The comments that are being made in relation to a capital gains tax ofsome description or another on rental/investment properties are in my opinion somewhat misguided.

Whilst it is true that there are a number of people using rental investments that are negatively geared to reduce their total tax liability the imposition of a capital gains tax on investment properties would create an inequity in the manner in which property investments are taxed. There are much simpler options available to reduce the benefits that these people are able to gain as follows:

1. Remove the ability to claim depreciation on investment properties - afterall how many buildings actually decline in value if they are properly maintained;

2. Amend the tax legislation so that rental losses are treated as "nil" for the purpose of calculating entitlements to WFF;

3. Make similar amendments to the legislation regarding all other social welfare entitlements, e.g. community services cards etc.

By making the above amendments landlords would only be able to claim deductions for the actual expenditure they incur in owning an investment property and they would not be able to inflate their entitlement to various social policy initiatives by reducing taxable income through rental losses.

Given the recent debacle with the finance companies in New Zealand it is little wonder that there is such high rates of investments in the relative safety of the property market, how many people have recently lost substantial amounts as a result of finance company collapses.

@ B.Mason

I think that we have already picked up enough bad ideas from the British over the years and if this was one that even they dropped nearly 50 years ago I really don't think it would be a goer. In addition given the level of most mortgages these day the interest repayments would exceed the rental value on the property anyway so would this mean the owner/occupier could claim a loss to be offset against their other income.

I just hope some significant changes are made to tax to try and get this country moving. For too long we have been treading water and although changes to tax are not the silver bullet, it is necessary to do. This government came in with the promise of growing NZ so I hope they have the stones to back that up.

Imputed rental value of owner occupied housing (net of mortgage interest) should be taxed as income. This was the case in the UK until the 1960's. It's explained on the internet - just Google it. No great mystery. The policymakers are undoubtedly quite aware of it but they choose to overlook it because it is politically very contentious. Clearly, failure to tax it amounts to a subsidy to owner occupation effectively capitalised into higher house prices. Also it it inequitable that rent payers effectively do pay tax at income tax rates on the rental value of the property they occupy (they have to find a gross amount of income and pay tax on that before having a net amount of income with which to pay rent). Inroduction, would broaden the tax base, remove a subsidy capitalised into higher house prices and remove a gross inequity.