There is a new proposed Tax law that you need to be aware of regarding residential losses.

This proposed Tax rule is likely to be passed in parliament in June 2019, this new legislation will be backdated to 1st April 2019.

What Does This New Tax Rule Involve?

Starting from the 1st of April 2019 new ring-fencing rules will mean residential property owners will no longer be able to offset losses from their rental property against other forms of income (such as wages). Going forward losses can only be used against other rental losses in the person’s portfolio, or against taxable gains from the sale of property. Losses that are not used to offset other portfolio income will be rolled forward to be used in future years.

The 2019 Financial year will be the last year where rental losses can be used against other income. The ring fencing of residential rental losses will be in place in full at the beginning of the 2020 Financial year.

Important Aspect To Consider

The wording in the draft legislation is ambiguous, while it refers to “residential property”, this may also include land holding, farms and commercial entities. We will need to wait for the final legislation to determine the impact on these entities if any.

What Does This Mean To You?

This new legislation will have a major effect on tax outcomes, as well as making tax compliance much more complex. Just because you may not be getting a refund does not mean you do not have to file a tax return. If the losses are not rolled forward, they will not be available to be used in the following years.

The information and advice in this article is general in nature.

If you would like advice specific to you feel free to give us a call at 03 307 6455 or email us at