The much talked about new Association Rules are back before Parliament and unfortunately for those in the business of dealing in or developing property or erecting buildings, the Bill has not been substantially changed.
The new expanded definition of association has largely survived the Select Committee process and the new rules are likely to come into force in August, potentially from early August.
We are currently working through the rules, so if you are looking to buy a rental property in August please contact us for advice if you are concerned about potential tainting.
On the other hand, if you are in the business of erecting buildings, existing rental properties that you have could be tainted if you carry out improvements on those properties. If you are in the business of erecting buildings and are looking at making improvements to a rental property then contact us immediately as you need to know the implications of this.
Changing Use on Existing Stock
The other major impact that the change in Association Rules has is for those of you who have property bought for dealing and development purposes where you are considering a change of use. If you have a property bought for dealing and development purposes and you are considering holding it (i.e. making a complete change of use in respect of that property) you need to contact us urgently. You should consider restructuring the ownership of that property in the next two weeks before the new rules come into play.
Summary
In summary, the new Association Rules are coming in and, as feared, they are wide reaching and going to make it very difficult for those engaged in a business of dealing in or developing property or erecting buildings to prevent future rentals from being tainted.
More immediately than that though, if you have property owned by your dealing and development entity that you now wish to hold long term, you may need to take action within the next two weeks to restructure the ownership of that property before the rules change. If you are in the business of erecting buildings you also have to be extra careful if making improvements to existing rental properties.
If you want tax advice in relation to these issues please contact Anthony at GRA on 09 522 7955 or at [email protected].
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I would like to say thank you for the opportunity for allowing me to come to the property school at Gilligan Rowe + Associates. Im in my early stages of becoming a property investor in New Zealand and to able to come to the property school has enabled to me gain very valuable information and knowledge which will help me be successful in property investing. The property school itself is one like no other because there is so much value given and from experts that practise what they are teaching. This in property school was one of the main highlights because being able to meet experts through the property school was my first time and gave me more confidence in general about property investment. Having combined reading the books (Property 101, Tax structures 101) at home and attending property school, the breath of valuable information and knowledge I have attained is substantial. - Tesfalidet, December 2019
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