I am amazed that Mangle hasn't put himself up for adoption yet to be honest...
So on Sunday I did taxes for the first time in years. In New Zealand, income tax is paid on your behalf by your employer before you get your wages. At the end of the year you get sent a Summary of Earnings, and if it looks right you do nothing and the IRD calculates whether you are owed or whether you owe. Generally neither happens, and nobody has to do anything, and that's how it's been for me since I've been working at this place.
But last year, we rented out our apartment. This means extra income, and also claiming of expenses against that. You can claim insurance, rates, maintenance/improvements, and interest on your mortgage as expenses. Because it's an apartment this means bodycorp fees, and also the Dreaded Earthquake Levy because that's a maintanance/improvement expense.
Our renting situation is fiscally neutral, more or less. But the Dreaded Earthquake Levy (which is a temporary extra fee everyone in our building pays to raise funds for necessary earthquake strengthening work) makes it run at a loss. So this year we're getting tax back, because the expenses mean that the income tax already paid from my wages was too much. Neato!
Naturally we'll put that against the mortgage. So technically, renting our apartment out is paying our mortgage off faster cos of lump sums against the principal whenever we get tax back.
Meanwhile, last night was the bodycorp AGM, at which it was decided that this year we'd all pay twice as much into the earthquake fund, because it looks like we might finally get some action* on it and we want to make sure it can be covered without leaving everyone with a huge bill. We're probably talking close to a million dollars here, so the more of that we already have saved when it happens, the easier life will be.
So anyway, that will mean that the amount of tax that comes back next year will likely also double, so the lump paid off the mortgage will double... and you can see where this is going.
I'm aware that running at a loss isn't the ideal way to pay off one's mortgage faster, but it's nice to be able to take those lump sums off it every now and then, eh?
I just signed up for a swordfighting workshop. Because important skills for the modern woman!
* Since the Christchurch earthquakes, two things have happened in NZ - engineers with earthquake strengthening assessment and planning skills have become very very busy, with waiting lists of years, and building costs for earthquake strengthening have increased substantially.