To fully recoup the tax, investors would need to raise their rents by 25% by 2025.

So you’d be forgiven for thinking that property investors did pass on the tax.

But that’s not the whole picture.

Property investors also faced extra costs

Taxes aren’t the only added cost forced on investors.

Some interest rates have tripled since Labour brought in interest deductibility.

And investors couldn’t pass on all those costs.

An investor who was almost cashflow neutral in 2021 might now have to top it up by $400 a week.

This investor would have had to increase the rent by 148% to stay in the same place.

But rents only went up 20%.

So, like in this example, many property investors took those losses on the chin.

Once you factor it all in, National’s tax changes don’t help investors get further ahead.

It just means that investors are slightly less behind.

So when the rules change, our bank accounts aren’t suddenly flush with cash that can be passed on to tenants. It means we dip less into our own pockets.

One investor told me, "I’ll go from losing money plus having a tax bill to losing money without a tax bill.”

So, should Christopher Luxon (and other property investors) lower their rent?

No. Not in my opinion.

But what do you think? Hit reply and let me know your thoughts.

Genuinely interested to hear what you think.