Budget 2012: Changes 'could force holiday-home sales'

Property Editor·NZ Herald·

24 May, 2012 05:30 PM2 mins to read

Owners of holiday homes face changes to tax deduction rules. Photo / Supplied

Bach tax deduction changes could force some holiday home owners to sell, says Peter Miles of online booking business Bookabach.

Many holiday home owners relied on income to cover repairs, maintenance and upkeep and the Budget changes could make the amount of expenses they could claim "a bit more restrictive".

Miles hoped that might encourage people to rent their properties more to make sufficient income.

The Budget changed the situation for people who rent private assets and use them personally too, ensuring they won't be able to claim up to 90 per cent deductions on running costs and instead will have to apportion any tax deductions according to the amount of rental versus private use.

Read all of nzherald.co.nz's Budget coverage here.

Budget documents say those changes alone will be worth about $25 million a year, or $109 million over the next four fiscal years.

Holiday houses, yachts, cars and planes will be affected.

Bookabach has about 5800 properties on its website, www.bookabach.co.nz, posted by the owners.

The business surveyed 200 members and initial responses from 160 owners found 70 per cent needed the extra income from rent because it made all the difference to their situation, Miles said.

"They said they would not be able to maintain a property without income," he said.

"Losing tax deductions means less money and it could quite possibly tip the balance for some people."

People logged into discussion site www.propertytalk.co.nz to complain of the changes, saying those seen to be rich were hit hardest.