The Government has committed to a number of policy measures aimed at making the tax system fairer and improving housing affordability for owneroccupiers by reducing demand from speculators and investors.

One of these measures is to introduce loss ring-fencing on residential properties held by speculators and investors. This means that speculators and investors will no longer be able to offset tax losses from their residential properties against their other income (for example, salary or wages, or business income), to reduce their income tax liability.

The introduction of loss ring-fencing rules is aimed at levelling the playing field between property speculators/investors and home buyers. Currently investors (particularly highly-geared investors) have part of the cost of servicing their mortgages subsidised by the reduced tax on their other income sources, helping them to outbid owner-occupiers for properties. Rules that ring-fence residential property losses, so they cannot be used to reduce tax on other income, is intended to help reduce this advantage and perceived unfairness.

Officials are interested in feedback on the suggested changes outlined in this paper.