SUM - Summerset Group

[BlackPeter]

The effective tax rate of about zero percent for many retirement village operators means there is always a potential risk if tax laws change. If they build and own but don't sell a CGT based on realised sale profits shouldn't be a problem. The difficulty would be of the sale of occupation rights was classified in such a way it was considered a property sale but I wasn't aware of that being an option on the table.

The effective tax rate for gains from retirement villages is not Zero - It is (as soon as it is paid out) as high as the individual tax rate of the share holder. No benefit for the state to shift this tax obligation to the company by creating a special "tax Ryman" or whatever.

Any CGT proposal I have seen so far is on realised gains - and retirement villages don't realise their gains unless they sell their property, which they don't do.

A licence to occupy is not attracting a capital gains tax - and even if it would - its owners lose money. No taxes due for that.

B/S

[LAC]

CGT will have an effect on property prices in the short term, make no doubt about that!
We will see very average property increases thereafter, unlike the crazy increases we have seen in the past. I have a property portfolio because of the advantages from owning it, it is hard work I must admit but there are advantages. At some point adding CGT and then the follow-on to removing the negative gearing.....then for me there will be advantage over owning property.

[bull....]

The effective tax rate for gains from retirement villages is not Zero - It is (as soon as it is paid out) as high as the individual tax rate of the share holder. No benefit for the state to shift this tax obligation to the company by creating a special "tax Ryman" or whatever.

Any CGT proposal I have seen so far is on realised gains - and retirement villages don't realise their gains unless they sell their property, which they don't do.

A licence to occupy is not attracting a capital gains tax - and even if it would - its owners lose money. No taxes due for that.

B/S

you miss the point , property prices fall or flat retirement company units must also reflect the market by falling or flatlining.

who cares if they hold them forever it not how they make there money

[winner69]

you miss the point , property prices fall or flat retirement company units must also reflect the market by falling or flatlining.

who cares if they hold them forever it not how they make there money

Short to medium term reaction to CGT will happen and likely to effect sales and thus price ...but market might settle down in a few years or so

[minimoke]

Here is some light reading on CGT implications for retirement Villages

https://taxworkinggroup.govt.nz/site...tal-income.pdf

[BlackPeter]

you miss the point , property prices fall or flat retirement company units must also reflect the market by falling or flatlining.

who cares if they hold them forever it not how they make there money

You miss the point. The introduction of a CGT does not reduce property prices - If anything - it pushes them up.

I gave you a number of examples for countries with CGT and very high property prices, which proves that at least in these countries the introduction of a CGT did not cause property prices to drop. Actually - quite the opposite.

Can you give us examples for countries where property prices dropped due to the introduction of a CGT - or are you just talking about phantasy-land?

[bull....]

You miss the point. The introduction of a CGT does not reduce property prices - If anything - it pushes them up.

I gave you a number of examples for countries with CGT and very high property prices, which proves that at least in these countries the introduction of a CGT did not cause property prices to drop. Actually - quite the opposite.

Can you give us examples for countries where property prices dropped due to the introduction of a CGT - or are you just talking about phantasy-land?

rising property prices could be just to do with credit availability etc and not a cgt so of course it would look like a cgt had no effect in the long term.

[bull....]

https://www.nzherald.co.nz/business/...ectid=12223054

Capital gains tax: Government announcement expected today

[Beagle]

Here is some light reading on CGT implications for retirement Villages

https://taxworkinggroup.govt.nz/site...tal-income.pdf

Thanks minimoke. For time poor people here is the tax working group's preference

Group’s preference

If income tax is extended to gains on the sales of shares, the group’s preference is to do nothing particular for this industry as it will be fully taxed on its economic income albeit in a different way to other industries. A taxation of the gains on share sales will align New Zealand’s tax settings of this industry with Australia’s.

[BlackPeter]

rising property prices could be just to do with credit availability etc and not a cgt so of course it would look like a cgt had no effect in the long term.

If it looks like a duck and walks like a duck and quacks like a duck than, maybe - it is a duck ;

CGT is an outstanding method to increase bureaucracy and compliance cost for everybody without increasing tax take, but there is no evidence at all that it ever reduced property prices.

Why do you keep warming up this old fairy tale? I am sure you know better.