The government is being urged to delay bringing in its new housing tax law until next year.
New housing tax legislation is set to come into effect in October. Photo: RNZ / Nate McKinnon
The government is asking for feedback on its mammoth 143-page housing tax discussion document, which it released following the announcement of suite of measures in March designed to cool the housing market.
The report proposes that interest limitation rules will generally apply to residential property which is rented to tenants, but there are some exemptions, including residential property outside New Zealand, farmland, retirement villages and rest homes.
It also proposes to change definitions around new builds and numerous other technical and transitional issues. The new legislation is set to come into effect in October.
KPMG tax partner Rachel Piper said the law should come into force at the start of April next year instead.
"By that stage, we'd expect the legislation would have been enacted.
"Taxpayers can then take tax positions and make decisions based on legislation that's actually enforced rather than trying to guess as to where, eventually, it will land.
When taking positions on things like for paying provisional tax it was important to know what the rules would look like, she said.
Piper said the proposals were too complex to understand and put investors at risk of not being able to keep up.
"A lot of complexity proposed through this discussion document and lots of new terminologies.
"Investors are going to have to be thinking about things like debt stacking, tracing and high watermarks. Certainly our view is that there is a real risk of non compliance.
"The more complex you make the rules, the more difficult it is sometimes to actually, even understand whether you are complying or not, and an awful lot of people do have investments in residential rental properties."
Public feedback on the discussion document closes on 12 July.