IRD are currently proposing to ring-fence losses from rental properties, with effect from 1 April 2019. This is a significant change to the concessions that have been enjoyed for many years, and will have a significant impact on cash-flows for owners of rental properties who rely on the tax savings to help fund the property. This is still in the planning stages, and we will keep you updated as more information comes to hand, but in the meantime, here are some things you should be thinking about now:
- Consider undertaking any planned repairs that you were contemplating before 31 March 2019.
- Consider what impact there will be on your cash-flows if you no longer receive a tax benefit from your rental losses.
- Consider acquiring rental properties that provide a higher rental yield and lower capital gain.
- Consider refinancing rental property debt against other income sources (eg business income) so deductibility is not impacted.
As always, this is a complex area, and there are still many unanswered questions resulting from the planned changes, but if you have any questions as to how this might impact you, please give us a call.