How does IRD expect rental property mortgage cash back and retention offers to be declared? Are there any technical rules around when/if you declare it as income on the year it is received vs at the end of, or split across its term etc?
So I assume this situation could affect a lot of property owners in NZ due to the massive market run and drop since COVID. I hope a possible future government that implements it would take into consideration the prospect that with a likely grandfathering ruling where they set the CGT start date, that it may cause properties that have lost value since purchase to pay tax on sale.
Our situation is we had to move out of our own home and get tenants in as it was unaffordable on a single income starting a family to stay there. So it is now an "investment property" even though it is our only property, once our home. It has dropped in value since purchase near the peak. If a CGT comes into affect say next year and the grandfathering value from that date, say 200k under what we paid, it goes up 100k and we pay CGT on a 100k loss if sold. This would mean the government is taxing our equity and deposit we have spent years saving, all because we couldn't afford to live there while starting a family. I presume this would defeat the intention of a CGT..
Do you imagine the government would consider this as quite a likely scenario under the current market conditions and have a ruling around paying CGT based on purchase value vs grandfathering date whichever is lower and/or fairer?