Tax decision will concern investors

The NZICA has revealed that the IRD has won its case claiming that an investor could not use losses from her rental properties to claim Working For Families credits because she was operating her portfolio in a way that amounted to carrying on a business.

There will be countless investors around the country in her situation. With relatively small property porfolios, they offset their losses against their incomes to increase their Working for Families credits.

They could conceivably get about $3000 per child per year – that’s a lot of money to pay back if the IRD decides their operation is a business and those losses are disallowed.

Remember, while the losses may be deemed to be out of bounds for Working for Families calculations,  that doesn’t mean they haven’t come out of an investor’s pocket in the first place.