nz shares or property

[kiora]

" As Clint Smith notes, interest deductions at present are, with the exception of the thin capitalisation rules, generally fully allowable if incurred in deriving gross income. The deduction relates to the rental income that is being earned from the underlying property being financed.

However, as the argument for greater application of section CB 6 notes the economic returns from property are twofold. Firstly, in the form of taxed rental income and secondly in untaxed capital growth. The present treatment, therefore, gives an allowable interest deduction for both taxed and untaxed gains. "
https://thespinoff.co.nz/politics/08...+December+2020

[Aaron]

Fortunately the Prime Minister is up with the play. Or maybe not.

Put to her that people who invest in shares, for example, don’t always expect the value of that asset to go up, so why should it be different for housing? Ardern responded: “This gets to the heart of the issue of why so many New Zealanders turn to the housing market.”Ardern then walked off stage, having previously signalled she was taking last questions at her post-Cabinet press conference.

Whew, saved by the bell.

https://www.interest.co.nz/property/...-when-it-comes

I guess if it is government and central bank guaranteed then why would you invest in anything other than rental houses. Sadly some young people might see Jacinda Ardern as an advocate for youth but they would be sadly mistaken. She is little different to John Key as far as I can tell.

[GTM 3442]

Out of idle curiosity, why are so many people so certain that the tax system is the best tool for solving the current housing crisis?

[fungus pudding]

Out of idle curiosity, why are so many people so certain that the tax system is the best tool for solving the current housing crisis?

That would take an extensive professional survey to find the answer. Check with Colmar Brunton or one of the various survey companies for a quote.

[Bjauck]

Out of idle curiosity, why are so many people so certain that the tax system is the best tool for solving the current housing crisis?

There needs to be reform in many areas not just tax, imo.

Ardern has more or less blamed the public for her failure to reform the tax system. She ruled out a CGT or Wealth tax. As Ardern's Party got a majority of votes, I am presuming that there may be more voters who think their self-interest is better served by allowing any housing issues to remain or worsen rather than reform the tax system.

https://www.tvnz.co.nz/one-news/new-...s-ive-listened

[dobby41]

Out of idle curiosity, why are so many people so certain that the tax system is the best tool for solving the current housing crisis?

It isn't but the the tax system isn't right either.
CGT won't drop the house prices - may do as a one off but then off they go again.
Even with a CGT residential leveraged property investment is still the best game in town to grow your capital base (for the average punter).

[SBQ]

It isn't but the the tax system isn't right either.
CGT won't drop the house prices - may do as a one off but then off they go again.
Even with a CGT residential leveraged property investment is still the best game in town to grow your capital base (for the average punter).

While CGT may not solely fix the housing crisis problem in NZ, it will promote investment into more productive areas (as commonly seen overseas in Canada, Aus, US, UK etc). The table is so one sided in NZ that only a fool would choose investments non-other than NZ residential properties. The proof is clear ; look what happen since COVID came about and interest rates crashed. NZ corporations as a % of total of NZ's debt/GDP is insignificant when compared to real estate debt & gov't debt. Other countries don't game it that way. You get the principal resident home as a one off, anything more and the taxation (as how it should be) will be treated at the same level as making any other investment (ie share ownership).

Frankly i'm sick of the excuses of having no CGT in NZ. The TWG recommended it - why should Jacinda know better? It's like they're trying to find the be all end all 'single' fix solution when CGT was never intended to function that way to address affordable housing.

Earlier in the week I also heard another silly proposal of taxing in NZ (came out from Auckland Uni if I recall correctly). The person on talk radio explained that to address wealth inequality, the rich will pay a direct tax on their assets based on the bank's 'free market rate' which is basically at term deposit rates. So if a person had $500K in cash and was to invest into NZ residential properties, he/she may get a loan of $1M to buy a house, the new tax proposal is that $500K would be treated as if it was invested in the banks TD rate (ie the risk free rate) and that rate would be taxed at the individual's marginal tax rate.

[Aaron]

Out of idle curiosity, why are so many people so certain that the tax system is the best tool for solving the current housing crisis?

personally I don't think it is the best tool. As has been pointed out on here, Aussie has a capital gains tax and their housing market is similar to ours. One thing the govt could do is reduce the central banks inflation target to 0%. As housing and asset price inflation is a result of their policy to raise prices across the board at 2%.

A capital gains tax could broaden the tax base and (I don't like to use the word fair as FP will attack if I use it) increase the perception of fairness as those with wealth benefiting from central bank and monetary policy would be seen to be contributing.

[Aaron]

Good news on the demand side of the problem. Everyone keeps yapping about the supply side but if we closed the borders demand for housing would drop considerably and if I understood economics 101 correctly decreased demand should lead to decreasing prices.

https://www.interest.co.nz/property/...pared-year-ago

If the country just declared a man made climate emergency surely filling the country up with more people is not an appropriate response unless of course the govt is full of s**t. I think Greta called it virtue signalling.

[dobby41]

Good news on the demand side of the problem. Everyone keeps yapping about the supply side but if we closed the borders demand for housing would drop considerably and if I understood economics 101 correctly decreased demand should lead to decreasing prices.

https://www.interest.co.nz/property/...pared-year-ago

If the country just declared a man made climate emergency surely filling the country up with more people is not an appropriate response unless of course the govt is full of s**t. I think Greta called it virtue signalling.

So that article says immigration down 90% but demand doesn't seem to have dropped?
At the moment the border is open to Kiwis only - is that not enough closure of borders?