If National wins ...

[Major von Tempsky]

"What's to stop it being put in partner's or kid's names?"

Presumably, logically, in most cases, a foreigner's partner and kids will also be foreigners...

Strikes me it is a pretty strong capital gains tax if a property gain is taxed if sold within 2 years of purchase.

Daytr: The King of Quibblers.

[fungus pudding]

I think the expression is, if it walks like a duck, squawks like a duck..

http://www.nzherald.co.nz/nz/news/ar...ectid=11450781

I agree with the article, the proposed CGT isn't the reason why Labour lost in 2014. It won't have garnered many votes from property investors, but there were more fundamental issues that many voters did pick up on, and let's face it, most of the marketing noise came from National's higher campaign spending.

This is income tax. It's a far cry from CGT. It's a tweak to tax rules already in place.

[Daytr]

MVT, tax law & avoidance is all about quibbling. That's how loopholes are discovered & trucks driven through them.
The partners & kids I refer aren't necessarily foreigners but Kiwis & in fact I wasn't referring to foreign investors at all, just anyone who wants to get around this CGT. Its one of the issues Gareth Morgan highlighted with CGTs that don't include the family home.

"What's to stop it being put in partner's or kid's names?"

Presumably, logically, in most cases, a foreigner's partner and kids will also be foreigners...

Strikes me it is a pretty strong capital gains tax if a property gain is taxed if sold within 2 years of purchase.

Daytr: The King of Quibblers.

[elZorro]

MVT, tax law & avoidance is all about quibbling. That's how loopholes are discovered & trucks driven through them.
The partners & kids I refer aren't necessarily foreigners but Kiwis & in fact I wasn't referring to foreign investors at all, just anyone who wants to get around this CGT. Its one of the issues Gareth Morgan highlighted with CGTs that don't include the family home.

Daytr, I noticed that IRD can only easily step in on property sales to levy a capital gains tax under the old rules, is if the seller does a lot of it, or if they are reckless enough to state in writing that they bought the property with the intention of making a capital gain on sale, and not as an investment. I wonder how many people do that?

I'm bitterly disappointed that Phil "Yes, the National Govt is spot on" O'Reilly is stepping down from Business NZ at the end of the year. This outfit has a lot more funds available for annual running costs than the Labour Party head office has. Guess who gets to lobby the most?

http://www.scoop.co.nz/stories/BU150...ay+20+May+2015

[fungus pudding]

Daytr, I noticed that IRD can only easily step in on property sales to levy a capital gains tax under the old rules, is if the seller does a lot of it, or if they are reckless enough to state in writing that they bought the property with the intention of making a capital gain on sale, and not as an investment. I wonder how many people do that?

Once again - there is no capital gains tax in NZ. This is income tax and always was applied by IRD if they thought that the purpose of the transaction was to make a profit on sale. They regard that, quite rightly, as income. I have no idea why you think anything needs to be in writing.

[Jay]

Seem to be talking to a brick wall there FP!
I have always said the same as well, it is treated as Income.
Not sure about other countries that have a CGT as to whether their income laws are different, but maybe it just comes back to the IRD's opinion on whether you are "trading" or not and tax you on your total income accordingly.
Perhaps this "change" in the law is to make more transparent, less grey

[elZorro]

Seem to be talking to a brick wall there FP!
I have always said the same as well, it is treated as Income.
Not sure about other countries that have a CGT as to whether their income laws are different, but maybe it just comes back to the IRD's opinion on whether you are "trading" or not and tax you on your total income accordingly.
Perhaps this "change" in the law is to make more transparent, less grey

Quite right, I should have said income tax, which is at a higher rate. But my point is that IRD rarely test this opportunity, unless they have some firm evidence. So while FP says that there is already technically a tax on the trading of property, it doesn't always get applied when it should, in my opinion. A close relative and others I heard about, did get caught by the IRD a few years back, it made the whole strategy of renovating a lot less exciting.

[iceman]

This is income tax. It's a far cry from CGT. It's a tweak to tax rules already in place.

Of course you are right. There is no new taxation introduced with this tweak. Anyone that comes under this new rule, should have been paying INCOME TAX anyway. Now anything bought and sold within 2 years will not sidestep paying income tax like they should be.
Daytr, as with any tax, there are always ways around avoiding it if people want to.Requiring foreign property buyers to be registered with the IRD, having a NZ bank account and providing their domicile country's tax number, will surely make it easier to track them, tax them and reduce risk of money laundering.
I know you very much dislike John Key and everything he does but I fail to see why you can not support this !

[craic]

One of the factors that everyone seems to overlook is that anyone who is "trading" be it shares ferrets or houses and pays tax accordingly, is also entitled to claim losses against total income. For the Department, any gains in their hunt for evaders will be offset to some degree by the losses that they find and they do find losses. I had a rental house on my place and paid taxes accordingly under the old regime with a set value on the rental in the equation. I sold the house and land with a Certified valuation that showed the house to be worth $20,000 less than my last tax return figure. I did not claim for this "loss" as I had not obtained the valuation, it was the buyer. IRD altered my return and took this off my annual tax on total income and I had the price of a very nice overseas holiday. I am aware that things have changed now.

[artemis]

Quite right, I should have said income tax, which is at a higher rate. But my point is that IRD rarely test this opportunity, unless they have some firm evidence. So while FP says that there is already technically a tax on the trading of property, it doesn't always get applied when it should, in my opinion. A close relative and others I heard about, did get caught by the IRD a few years back, it made the whole strategy of renovating a lot less exciting.

Your point that IRD rarely test (basically) whether someone is a trader or not is based on what exactly? And the intention / trader test is by no means confined to residential property. Bear in mind that IRD have extremely wide powers - not to mention harsh penalties. While they don't say much at all about their data matching, investigative systems and data held or available, my systems experience tells me they know a heck of a lot more than many think.

If IRD have not so far followed up suspected traders, they may still be flagged for future investigation. The ROI is very high and more compliance funding is expected in the Budget.

No reason not to use the IRD anonymous tipline if there is suspicion that someone is evading tax. It is in everyone's interest that fair share is paid. The black economy is thought to be worth more than $20 billion a year - that is a lot of tax being evaded.