10 Apr 2012

Landlords want tax relief on quake strengthening work

7:21 am on 10 April 2012

Commercial landlords are calling for tax reform to help with seismic strengthening and rebuilding.

Some estimates put the cost of strengthening all unreinforced masonry buildings in New Zealand at about $2 billion.

Property Council chief executive Connal Townsend says tax incentives could make the work more affordable.

He says the money paid by property owners to strengthen their buildings should be able to be written off against tax.

"It strikes us as a pretty simple, yet sensible, policy because it will actually encourage good behaviour to make those buildings stronger," he says.

Mr Townsend says the removal of depreciation on buildings means there is now a disincentive for owners to invest the way they should to bring buildings up to standard.

Kiwi Income Property Trust owns retail and office buildings including the PricewaterhouseCoopers (PwC) Centre in central Christchurch, which is being demolished, and Wellington's Majestic Centre, which needs $35 million worth of strengthening work.

Kiwi Income's Chris Gudgeon agrees the current tax system works as a disincentive to rebuilding and strengthening.

He says strengthening buildings is a public good and it makes sense that there should be nothing to put people off the investment it requires.

PwC partner Geof Nightingale says it would be relatively easy to define some buildings as depreciable but any changes to the tax system are unlikely given the Government's financial position.

He says it may be more cost effective for the Government to provide direct subsidies for earthquake strengthening, than to make adjustments to the tax system.