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Budget changes: Death for LAQCs?
Posted Friday 4 June 2010
Do the Budget changes mean an end to LAQCs?
TEO believe no, but practitioners will still need to know how these structures apply. The Budget changes will probably mean increased compliance costs for LAQCs and hassle for practitioners to get their head around the Limited Partnership regime better.
NZICA are skeptical whether these changes to LAQCs will bring better integrity to the tax system. TEO think time will tell as many practitioners will now review their clients' business structures and whether LAQCs/QCs are still appropriate for their particular situation.
Government tax changes announced in the Budget are unlikely to have a major effect on the property market. We don’t believe there’s going to be a mass sell off of rental properties, but like any Budget there will be winners and losers.
What will change is the type of investor in the property market, which chooses long term income rather than capital gains. People who relied on tax losses to make their investments work or wanted quick capital gains will feel the pinch.
If you currently derive losses from an LAQC, the proposed changes may impact your ability to access those losses in future. Those with highly geared LAQCs will be mainly affected by these changes i.e. property speculators. Losses are limited to the value of the shareholder investment. For some personal ownership may be viewed more favourably rather than having an LAQC.
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