Good news Stories

[Dr_Who]

Hey GGG what happens if rates go up dramatically after one year?

[minimoke]

For the fourth month in a row QV reports today a further increase in property values up to $385,426 from $382,758 last month.

[mikeo]

What people loose sight of is that landlords are up for tax on profits which includes the sale of a property at a value over the purchase price. Its just that IRD aren't good at tracking these missing taxes.

I don't think so. My understanding is that tax on capital gains are taxable only if (one of) the reasons for purchasing the property was to re-sell at a profit. If this wasn't a reason for the original purchase then no capital gains tax is payable (although there would usually be a clawback of any depreciation claimed)

[minimoke]

My understanding is that tax on capital gains are taxable only if (one of) the reasons for purchasing the property was to re-sell at a profit.

I agree. And if we look at the returns from rentals over the past few years (pre 2007) compared with the rate of capital gain what do you think the real (but undislosed reason) was for the house purchase. The key reason people get into property is for the capital gain. They can't say its for the rental yield when this is so low on so many properties

[fungus pudding]

I agree. And if we look at the returns from rentals over the past few years (pre 2007) compared with the rate of capital gain what do you think the real (but undislosed reason) was for the house purchase. The key reason people get into property is for the capital gain. They can't say its for the rental yield when this is so low on so many properties

There is no tax on capital gains in NZ. However income tax can be applied to any profit if the sale was deemed to have been made for income - a subtle point, which gets back to the intent of the purchaser at time of purchase.

[AMR]

So this would imply those people who buy property so negatively geared that it doesn't turn a positive cashflow for years are really chasing capital gains and so should be paying tax on it...

Has the IRD done this before? (Go after the negative gearing crew).

[fungus pudding]

So this would imply those people who buy property so negatively geared that it doesn't turn a positive cashflow for years are really chasing capital gains and so should be paying tax on it...

Has the IRD done this before? (Go after the negative gearing crew).

They used to send a standard letter to new owners who showed a first year loss, full of silly questions such as ' is the property occupied by a friend or relative' and so on, but didn't often bother doing much about it. Nowdays they seem to concentrate on areas where there is plenty of acivity. Flick over merchanrs are taking a risk by deliberately trading for profit and not declaring profits. IRD have had a real clean up in Queenstown and other hot spots in recent years. Although primarily chasing section resellers, a fair few house buyers have had nasty suprises - and penalties.
I do think this whole area is likely to be more rigidly enforced in nthe future. It's more political than anything else, There are one hell of a lot of these type of buyers who actually lose money, and will be more likely to claim the loss.

[minimoke]

For the fourth month in a row QV reports today a further increase in property values up to $385,426 from $382,758 last month.

And more good news from REINZ.

August values are up 2% on July sales or from $340,000 to $346,000.

Average values are up from $389,302 to $405,742 and median time on market is the shortest in nearly two years at 34 days.

If we look at the low of Jan 09 this is a 6.7% increase in median value or a rise of 9.0% of average value. Time on market has fallen from 59 days to 34.

[minimoke]

And more good news from REINZ.

And we shouldn't loose site of Sections.
More sections sold in August (557) than in any time since October 07. A 10% increase in the number of sections sold this month and a 9.4% increase in value.

Value is now $175,000 up from the October 08 low of $165,000

[minimoke]

Its that time of year when the banks go hunting for those spring buyers.

BNZ now dropped its variable rate down to 5.59% which begs the question: how low will they go?