Landlords are getting tax relief from next month. Here’s how renters can politely ask for the trickle-down benefits.
Dear [landlord’s name],
Hello from your passive income at [your address].
I have great news: the war on landlords is over, and as the landed gentry, you will soon have your dignity restored. The pain and suffering of not being able to deduct your entire mortgage interest payments from your income on your tax bill is coming to an end. If other election promises come to fruition, you will also be able to evict me for no reason other than you feel like it, and then give the next tenant a fixed term tenancy. If that’s not a war won by landlords then I don’t know what is.
Now, your tax relief is not coming all at once. From this April, you’ll be able to claim 80% of interest expenses, and then from next April you’ll be able to claim that sweet, sweet 100% of mortgage interest against your income tax. Congratulations.
It’s a policy I’ve been watching since it was a twinkle in Luxon’s eye, since its architects promised it would put a “downward pressure” on rents that I’ve eagerly been looking forward to. Yes, this was widely opposed, with many experts saying that actually landlords are generally out there trying to make as much money as possible. “All it’s gonna be is a cash handout for landlords,” said Luke Somervell of Renters United to Newshub just yesterday.
But these commentators haven’t taken into account landlords’ newly restored dignity, promised by David Seymour in the coalition announcement in November. You are now worthy of honour and respect! Perhaps Seymour has other ideas about what dignity means but you can’t argue with every dictionary ever made. Being worthy means having to act accordingly. Is trying to squeeze money out of people poorer than yourself dignified? Is turning a basic human need into an opportunity for profit dignified? Is being a tax cut millionaire dignified? I would think not.
Acting with dignity, I think, would mean recognising that the entirety of your tax break was my money first. This seems to me the respectable thing to do given it’s true and can be proved beyond a reasonable doubt in a court of mathematics. So how might a dignified person act on that recognition of fact? I reckon it’s simple: reduce the rent. By how much, you ask?
Well, let’s say I pay $500 a week ($26,000 a year, $20,000 of which is taxable once you deduct rates and insurance). And let’s say you have a $300,000 mortgage at 6.55%, or $19,656 in interest a year. By next April you’ll be able to claim close to zero profit on your tax bill. Assuming my rent isn’t your sole source of income, that’s about $5,000 extra in your pocket every year. That’s $96 a week that my rent could come down but let’s make it an even $50.
[Editor’s note: feel free to add your own rent into this equation.]
Shall we draw up a new tenancy agreement taking the tax cuts into account?
Your humble serf, I mean, tenant,
[your name here]
[address that you rent in case they confuse you for another tenant]
PS Did you get my emails about the [mould / hole in the wall / leak in the ceiling / broken tap]?