Thanks to Accountancy Age for drawing to our attention to the fact that not every country is tightening up on the tax benefits accruing to buy to let landlords.
While British investors are faced with significantly reduced mortgage interest rate tax relief and the end of the automatic 10 per cent wear and tear allowance, the accountants’ magazine has researched the far more generous tax regime down under.
In Australia, all mortgage interest costs can be deducted from earnings and investors are also able to 'negatively gear' their property losses - meaning they can offset any losses on rental property against their other non-property income.
Landlords also receive a 50 per cent reduction on the capital gains tax payable when the property is sold, so long as they have owned it for at least 12 months. In New Zealand, negative gearing is also allowed, and there's no capital gains tax at all.
Accountancy Age says some Australian politicians and pressure groups have lobbied for the negative gearing opportunity to be abolished. But the magazine quotes one tax expert in Australia as saying “there are too many people who have negatively geared properties for it to be a politically sustainable move to abolish it. The government has pretty much ruled it out."
Australia has about two million BTL landlords (out of a population of 23 million), with two thirds of those reporting a loss on their property income and making use of negative gearing. A decision by a government in the 1980s to scrap negative gearing was reversed within two years after property groups campaigned hard on the issue, arguing rents were rising as a result of the change.