How do you know that?
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Yes. Intent is the deciding factor as far as tax goes. Maybe they had lived in this home prior to living in their current home. Or maybe one of them did before shacking up as a couple. From time to time the market can be quite flat leaving owners who have bought elsewhere facing big bridging finance costs - so it can make sense to pop a tenant in waiting for the market to pick up. Looking at the figures in that article, and knowing the Dunedin market over the last few years, it looks to me like that is what happened. Anyway - good luck to them.
They had mortgages on both their properties. Obtaining a mortgage is not accidental. If you buy a second house live in, then retaining the other one is not an accidental decision. What is the purpose of retaining the other one if the intent is not to become a landlord?
Sure. Which still beggars the question why was a property originally purchased - or retained if inherited or became surplus to requirements. These Dunedin owners said they had made a $300k "profit". So even if their ownership was "accidental" they may have held on to for some time, even in today's market, to make such a "profit". Plus going to the trouble of becoming accidental landlords indicates a more than short term period of ownership. What was the intent behind owning it, if there was no intent on becoming landlords?Quote:
What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.
Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient.
Just trying to understand the tax rules behind NZ households’ biggest investment class. So if the intent on buying or keeping an “accidental” surplus house is not to become landlords in a tenancy situation, then presumably the intent is not to earn taxable rent from it. How is the gain from the owners’ equity on sale treated for tax purposes in such circumstances?
Fact is we don't know from the article what their actions mean and what their intentions were. You have made assumptions, fair enough but they are just assumptions.
Many property owners have seen values rise by multiple hundreds of thousands in the last year or two. Smart owners seeing values rise might well hold on to a property for a while.