Capital Gains Tax

[R2]

Given the retrospective company capital gains tax introduced by Labour last week, it could be time to consider the capital gains tax by another name intended to be introduced in the May 19th budget - how will this effect residential property investment do you think ?

A few thoughts I have are; will it be retrospective like this weeks law or will it have a grandfathering component - if the latter would it be an idea to buy property through a trust for the long term before the budget.

How will the law change effect the foreign investment patterns of recent years in residential property from non-aligned tax countries,USA particularly, where capital gains will have to be paid twice - maybe coastal property will be affordable for kiwis again but not a very good investment.

R2 please post your refernce for this tax

[R2]

Sorry for taking so long to to answer Enigma but had a week of travel to to places with poor connectivity.

Just mostly my bluster I must say, but do you not think that there will [u]not </u>be some form of CGT applied within the next 3 years - I certainly do, based on secondary research, from the PM's comments in Sweden in February through to treasury doc's and Cullens commentaries about investing less in housing for NZ'rs plus the number of Ozies buying here because there is none. Search google and all you get is pages of " NZ is a great place to buy property cause there is no CGT". There will be more tax in the next 3 years that is for certain.

One question is; in a rising market which may retreat - is it possible to purchase a property at fair market value clearly from the perspective of making a capital gain, including a fax to the tax department outlining this fact at the time of purchase and, at a point in the future, transfer it to a trust at a lesser but fair market value i.e. personal capital loss and hold it in the trust for the long term ? Just looking for angles as always.

[CJ]

Capital gains on houses will be longer off that 3 years. Two much political suiside. There is a trend to start taxing gains - look out for changes in foreign investments which are currently being proposed.

Re transfering property, the income tax rules regarding a transfer to a related party would stop what you are suggesting if applied to captial gains. Remember NZ already has a "capital gains tax" on property if you are a trader/deveoper/builder/speculator so these ideas have been covered. The smart may be able to get around though?

R2 Australians allready pay capital gains tax on NZ property if they are TAX resident in Australia

[R2]

Thanks CJ & Enigma.

Has any reader successfully or unsuccesfully claimed a capital loss for tax purposes on the sale of a property that they are willing to comment on ?