Ring Fencing of Rental Losses
Is Your Annual Tax Refund No More?
Late at night at the end of June 2019, legislation was passed limiting a person’s ability to offset losses from residential property investments against a person’s other income – ring fencing of rental losses (i.e. non-residential rental income).
For a large number of mum and dad residential rental property investors this meant the end of the annual tax refund they received based on the loss generated from their rental property.
For most people the rules are effective from 1 April 2019, so the tax refund for the year ended 31 March 2019 was the last.
Residential rental property losses can now only be used to offset against “residential rental income” earned in the year and any excess losses will be carried forward to the next income year.
There is no longer the ability to offset those losses against other employment or business-related income.