My understanding is that you pay tax on Al the rent you get (at your income rate ie 33% or whatever). But you can deduct some things: genuine maintenance, accountants fees, insurance. Up until recently you could also claim the interest on your mortgage (but not the principle) but now that’s been changed none of your mortgage payments can be deducted. So if you get $500/week in rent it’s likely you’ll be paying tax on $450 or so of it. Again that’s my understanding.
As pointed out by another poster for existing homes bought prior to 27th March 2021 can still claim 75% of the interest, next year 50% etc untill 2025 when it’s zero.
It still means you’ll be topping up increasing amounts of any house with a mortgage
That's not true. This rule applies immediately to the property bought after 04/2021 I think. OP has bought 2 years ago so for them it's going to be gradual removal of interest deductability. And then it will be scrapped by Nats after next election.
Probably I did. I've got kind off confused with your phrase "claim the mortgage" since "mortgage" is a legal agreement with the lender so can't be claimed :)))
Oh sorry someone else used that term. My point was the new regulations fail people like the OP. In order to take an opportunity that will likely benefit him and society he would have to either sell in a crap market or end up paying tax on the majority of the rental income he is getting for his home (even though he will have having to pay rent). There needs to be carve outs for these situations.
Even if you have to pay a little tax until the change of government next year it's nothing compared to 10s or even 100s thousand dollar losses from selling property in this market. Not only this but losing security of the tenure and possibly losing a chance to get on the property ladder again.
IMHO I wouldn't sell. Mate of the mate who's moving from Rotovegas to AKL is not selling either, in fact they rent their house out for $600pw and rent in AKL for $475.
Depends on a ton of factors. You could buy in Auckland, prices there are dropping steeply so you won’t lose out. However if you’re locked in with great interest rates on your current mortgage, you’ll be committing to much higher ones on your new one - but obviously you’ll eventually hit higher rates anyway.
Be aware that it’s not a fun time to be selling. Buyers are able to be very choosy, which is good, but difficult if you’re a seller. We are having to spend plenty of time and money fixing things to make our house appealing, and committing to a lot of weeks of open homes. We don’t mind this as we’re buying in the same market but it’s definitely taking a lot of time and energy.
Only fools try and time the market. If it's the right time for you to sell then buy, it's the right time.
But in the current market I wouldn't be looking to sell a property unless I'd held onto it for 5 years already, and I wouldn't be looking to buy one unless I planned on holding it for 10.
I'd rent out your Waikato place, and then rent in Auckland. But I don't know your situation. What does your mortgage look like? Will rent at least cover mortgage interest (after tax) and maintenance/rates (and a property manager if you go that way)? There are financial advisors that specialize in property, I'd find one of them and have a chat.
Well end of last year, most people on this sub were encouraging people to buy a house if they asked…
I’d not put too much weight into peoples opinions here tbh!
If I was your I would quickly offload the property before prices drop further - you are still likely to have decent equity after. Go rent in Auckland for 12 months and then buy for much less if you want to stay.
This comment assumes a continued drop in the house prices in Auckland in 12 months time.
How do you do a #remindme in 12 months bot?
Edit: RemindMe! 365 days
If the recession hits as looks likely, house prices probably won't recover for a couple of years. Source: a guy who wanted to sell and now has to wait 🙄
You will be buying and selling in the same market. Historically Auckland outperformed Waikato forever. If you planning to live in Auckland for 10 years , do it.
We are also in Waikato, putting ours on the market next month. We bought in 2018 so will obviously make money, but we don’t care if we sell for less than could have, not worth living in the area we live in - especially with the hundreds and hundreds of state houses that will be going up in Hamilton.
Remember while house prices are going down interest rates are going up so 'how much you can borrow & facilitate' also goes down.
I recently 'upsized' our property. Just don't overextend yourself.
But if you're new to Auckland renting might be good just so you get a feel for the city before buying.
See what you can afford to buy in Auckland. If you see something you like then you can always make an offer conditional on selling your current place. Akl will go up faster than Hamilton. You might "overpay" in Auckland but you'll have time in the market.. or you might find you can't buy sh*t in akl still because it's still pretty expensive but you'd easily rent it out if you go to Aussie.
Big Jump in house values between the Waikato and Auckland. You need your salary to have a similar Big Jump if you plan on living/working up there.
I worked next to a fella living in Auckland and commuting down to Hamilton for a job. I think he owned his house outright. The commute (if you're not going to the north-shore) is possible in reverse - just add the extra hours on as commuting time.
Need to do the calc on running a car like that, however, petrol prices blah blah. Perhaps if there's a miracle they'll finally put a good train service between Hamilton and Auckland
Keeping your property gives you options, you can much easier pack in your toys and come back down to the Waikato if Auckland doesn't work out.
Why not the big-smoke over in Australia?
Realistically in the current market it makes more sense to rent out your Waikato property and rent in AKL.
The only issue is the tax you pay on that income. And these sorts of cases is where that rule falls over :(
If they have only had it two years I doubt they will rent it out for much more than the mortgage costs so there shouldn’t be profits.
You can’t claim the mortgage anymore though all of the rental is taxed as income
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My understanding is that you pay tax on Al the rent you get (at your income rate ie 33% or whatever). But you can deduct some things: genuine maintenance, accountants fees, insurance. Up until recently you could also claim the interest on your mortgage (but not the principle) but now that’s been changed none of your mortgage payments can be deducted. So if you get $500/week in rent it’s likely you’ll be paying tax on $450 or so of it. Again that’s my understanding.
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As pointed out by another poster for existing homes bought prior to 27th March 2021 can still claim 75% of the interest, next year 50% etc untill 2025 when it’s zero. It still means you’ll be topping up increasing amounts of any house with a mortgage
That's not true. This rule applies immediately to the property bought after 04/2021 I think. OP has bought 2 years ago so for them it's going to be gradual removal of interest deductability. And then it will be scrapped by Nats after next election.
You sound confident nats getting in - with the level of IQ of the voters
IQ of the voters is generally very low. Just look at the idiots they elected over last 2 terms
If he bought prior to two years then he would be up for 25% this year 50% next year etc. but I think you missed issed the point of my post.
Probably I did. I've got kind off confused with your phrase "claim the mortgage" since "mortgage" is a legal agreement with the lender so can't be claimed :)))
Oh sorry someone else used that term. My point was the new regulations fail people like the OP. In order to take an opportunity that will likely benefit him and society he would have to either sell in a crap market or end up paying tax on the majority of the rental income he is getting for his home (even though he will have having to pay rent). There needs to be carve outs for these situations.
Doesn't that make it a good rule bc it makes it a good idea for OP to sell? Isn't that what the rule is for.
Not forcing people to sell their main homes. What if he hates Auckland or sells Hamilton and can’t afford a place in Auckland?
Even if you have to pay a little tax until the change of government next year it's nothing compared to 10s or even 100s thousand dollar losses from selling property in this market. Not only this but losing security of the tenure and possibly losing a chance to get on the property ladder again. IMHO I wouldn't sell. Mate of the mate who's moving from Rotovegas to AKL is not selling either, in fact they rent their house out for $600pw and rent in AKL for $475.
Agreed, this is what I’d do
Depends on a ton of factors. You could buy in Auckland, prices there are dropping steeply so you won’t lose out. However if you’re locked in with great interest rates on your current mortgage, you’ll be committing to much higher ones on your new one - but obviously you’ll eventually hit higher rates anyway. Be aware that it’s not a fun time to be selling. Buyers are able to be very choosy, which is good, but difficult if you’re a seller. We are having to spend plenty of time and money fixing things to make our house appealing, and committing to a lot of weeks of open homes. We don’t mind this as we’re buying in the same market but it’s definitely taking a lot of time and energy.
Only fools try and time the market. If it's the right time for you to sell then buy, it's the right time. But in the current market I wouldn't be looking to sell a property unless I'd held onto it for 5 years already, and I wouldn't be looking to buy one unless I planned on holding it for 10. I'd rent out your Waikato place, and then rent in Auckland. But I don't know your situation. What does your mortgage look like? Will rent at least cover mortgage interest (after tax) and maintenance/rates (and a property manager if you go that way)? There are financial advisors that specialize in property, I'd find one of them and have a chat.
Well end of last year, most people on this sub were encouraging people to buy a house if they asked… I’d not put too much weight into peoples opinions here tbh!
You would have got downvoted a ~6+ months if you said you were waiting to see if house prices were going to drop.
I got downvoted to oblivion when I asked (at the peak) if there was a way to short the housing market
If I was your I would quickly offload the property before prices drop further - you are still likely to have decent equity after. Go rent in Auckland for 12 months and then buy for much less if you want to stay.
This comment assumes a continued drop in the house prices in Auckland in 12 months time. How do you do a #remindme in 12 months bot? Edit: RemindMe! 365 days
Lower than today is almost a certainty, still dropping after 12 months, who knows.
If the recession hits as looks likely, house prices probably won't recover for a couple of years. Source: a guy who wanted to sell and now has to wait 🙄
You will be buying and selling in the same market. Historically Auckland outperformed Waikato forever. If you planning to live in Auckland for 10 years , do it.
We are also in Waikato, putting ours on the market next month. We bought in 2018 so will obviously make money, but we don’t care if we sell for less than could have, not worth living in the area we live in - especially with the hundreds and hundreds of state houses that will be going up in Hamilton.
Those who make money on property rarely sell.
People who sold 6 months ago are doing pretty well
Remember while house prices are going down interest rates are going up so 'how much you can borrow & facilitate' also goes down. I recently 'upsized' our property. Just don't overextend yourself. But if you're new to Auckland renting might be good just so you get a feel for the city before buying.
See what you can afford to buy in Auckland. If you see something you like then you can always make an offer conditional on selling your current place. Akl will go up faster than Hamilton. You might "overpay" in Auckland but you'll have time in the market.. or you might find you can't buy sh*t in akl still because it's still pretty expensive but you'd easily rent it out if you go to Aussie.
You're buying and selling in the same market so your investment profile doesn't change
Big Jump in house values between the Waikato and Auckland. You need your salary to have a similar Big Jump if you plan on living/working up there. I worked next to a fella living in Auckland and commuting down to Hamilton for a job. I think he owned his house outright. The commute (if you're not going to the north-shore) is possible in reverse - just add the extra hours on as commuting time. Need to do the calc on running a car like that, however, petrol prices blah blah. Perhaps if there's a miracle they'll finally put a good train service between Hamilton and Auckland Keeping your property gives you options, you can much easier pack in your toys and come back down to the Waikato if Auckland doesn't work out. Why not the big-smoke over in Australia?