Lately, ring-fencing seems to be on every investors’ minds. Why shouldn’t it be? Ever since the Inland Revenue Department published issue paper Ring-fencing rental losses and called for public submission, the industry has been abuzz with ‘predictions’ that this will spell the end of residential property investment as we know it.
I for one think drawing hasty conclusions that are nothing more than gobbledygook does no-one any favours. To ring-fence rental losses in the proposed form will not, and should not, deter those that are long-term true investors.
Let’s break it down:
Overall, I do feel that there has been an unwitting conflation between policy decision and market reality. Just because the policy flavour du jour is ring-fencing doesn’t mean all property investors are running around making a tax loss. Just because you can’t claim your losses doesn’t mean you are going to make a loss. The ones who panic at a mere whiff of ring-fencing are doing nothing more than pulling a bait-and-switch on themselves. Keep your head down, focus on the business at hand – that is running a profitable rental portfolio!
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