In the current low interest rate environment, we’re seeing a lot of clients look at repaying debt quite aggressively (paying above the minimum or making ‘additional’ payments to their mortgage on a regular basis). There can however be some downsides to this when applying for new lending, and I’d like to show you how to get around these so that you’re achieving your desired result, and also keeping the bank happy. 

Now that we have had time to reflect on the impact of these announcements, we thought you would appreciate our view on things going forward.

There has already been some great commentary written about the changes and we have included some links for you to review.

The main five points however:

As part of the Government’s property policy announcements today (23 March 2021), there are two significant changes to tax rules that will impact residential property investors.

If you don't support the changes, there is a petition that you can sign (link here and at the end of this blog).

I ran a webinar discussing these changes on 25 March. You can watch the recording here.
 

If you are living in NZ right now, you are very likely to be aware of what is happening in the property market, with auction clearance rates up, and property prices rising at rapid rates.  

A client came to us to see if we were able to provide alternatives to the situation she was in with her bank. She had tied everything together with one bank and had circa $3m of lending against 5 properties, including her own home.

This month’s article is a continuation of last month’s on associated persons “traps”. Last month I highlighted two traps that can catch the unwary when moving property between associated entities. This month I have another two traps that readers should be aware of. 


Trap 3 – Tainting for Life
Friends, Jesse and Skylar, are 50% shareholders in a property development company called...

 

This blog is Part 1 of 2 on traps that arise when land transactions involve “associated persons”. By way of background, both the Income Tax Act and the Goods and Services Tax Act have definitions of associated persons and special rules that apply to transactions between associates. 

Property dealers, developers and investors are often party to transactions with associated persons (e.g. restructuring ownership of existing property). 

 

As mortgage advisers we often see clients in situations where they have gotten themselves into debt and aren’t always managing things in the most effective ways, and this includes first-home buyers and also property investors.

 

The most common mortgage mistakes we see are as follows:
 

It has been another month of rate competition with arguably the largest attention going to Kiwisaver provider Simplicity’s entry into the mortgage industry with a market leading 2.95% rate. What was of particular interest with this was that unlike other leading rates which were fixed rates, Simplicity has an offer which is based on a floating rate. With an initial plan of $50m to be lent over the......
 

Financing renovations by topping up on your home loan can be the easiest and cheapest way to get the job done if you don’t have access to the cash. ‘Topping up’ means increasing your existing lending with your existing bank. In some cases, if it makes more sense economically speaking, it could even be worthwhile refinancing (moving to another bank) for a better deal on your existing mortgage AND the new funds being requested......

 

I wrote about loss ring-fencing in my December article, and it is still a hot topic. With the rules to take effect from 1 April 2019, and the legislation still not finalised, there are a number of questions that remain. I address some of these using case studies, which could well apply to you.  

But first, in case you missed my last blog, the main points from the draft ring-fencing of losses bill are.....

 

On 5 December 2018, the Government released the first draft of legislation dealing with the proposed ring-fencing of tax losses from rental properties. First impression on reading the Bill is that it is extraordinarily complicated and leaves questions unanswered. Here is a quick summary of the key points........

 

There is a reasonable chance you have already heard about the phenomenal rates being offered almost across the board now with most banks having rate specials down into the 3%'s.

What you may not be aware of is that you don’t necessarily need to wait until your current fixed rates expire in order to take advantage of these very low rates.