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View Poll Results: Should there be a Capital Gains Tax on Property

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  • No

    213 100.00%
  • Yes

    74 56.49%
  • Goff is just an idiot

    2,147,483,658 100.00%
  • Epic fail for Labour

    1,935 100.00%
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  1. #491
    Legend minimoke's Avatar
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    Quote Originally Posted by elZorro View Post
    Recent article on property investment, their example assumed the property was also paid off over 25 years. Even on conservative return settings, it's way better than a standard fund, because of leverage and tax being defrayed until the end.

    https://www.nzherald.co.nz/business/...y+8+March+2019
    Seems to be a few things missing. Like the GST paid on 1% of property value each year on repairs and maintenance.

    And at 3% capital gain, 2% is simply due to inflation. Leaving just 1% true capital gain.

    And this is where it gets complex and where Robertson cant figure things out. Say there is a $99 capital gain. $66 is due to inflation and has nothing to do with the property owner. $33 is the gain the property owner makes on taking the risk in owning property.

    Now, what labour wants to do is tax the gain at the nominal tax rate. So the $99 is going to be taxed at 33%. Meaning $33 comes off the $99 gain.

    So essentially the government wants to tax 100% of any gain the property owner makes on taking a risk.

    Thats what happens when you vote for a "fair" government!
    Last edited by minimoke; 08-03-2019 at 11:02 AM.

  2. #492
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    Quote Originally Posted by Joshuatree View Post
    Attempted groundswell spin and fear from National . We will see what the Govt takes up, im thinking the property cap gains tax myself and good job too, its been an unfair situ for far too long and National would never do anything that may be the slightest threat to their base thats all they care about.A thorough cleanout and reset is what they need to have any chance down the line.The removal of power avarice and snouts in the trough.

    As i said there are also good people in the national party too but they are being tarred with the same egotistical brush welded by their leader and his cronies.They need to remove this destructive rump asap imo..
    It would be interesting to see the type of assets owned by the voters for National and Labour. Whilst, National voters on average are probably wealthier, I suspect the middle class Labour voters would tend to rely more on public sector pension schemes and rental housing investments rather than shares or business assets. However this is just my guesstimate and I have not seen anything to corroborate it! Perhaps the MP’s list of pecuniary and real interests could be an indication.
    Last edited by Bjauck; 08-03-2019 at 11:17 AM.

  3. #493
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    Quote Originally Posted by minimoke View Post
    Seems to be a few things missing. Like the GST paid on 1% of property value each year on repairs and maintenance.

    And at 3% capital gain, 2% is simply due to inflation. Leaving just 1% true capital gain.

    And this is where it gets complex and where Robertson cant figure things out. Say there is a $99 capital gain. $66 is due to inflation and has nothing to do with the property owner. $33 is the gain the property owner makes on taking the risk in owning property.

    Now, what labour wants to do is tax the gain at the nominal tax rate. So the $99 is going to be taxed at 33%. Meaning $33 comes off the $99 gain.

    So essentially the government wants to tax 100% of any gain the property owner makes on taking a risk.

    Thats what happens when you vote for a "fair" government!
    I still fail to see the complexities of CGT. In the past posts you mentioned determining the correct 'valuation' for CGT would be a major problem. But it doesn't seem an issue in countries that have CGT.

    'Inflation' it's not added in the picture in terms of comparing different investments assets because inflation is compared equally across everything. It's the fault of the person that chooses to earn income from ie. cash term deposit than instead of higher risk ventures like stocks or rental properties, when it's clear the former gets the person less after tax income.

    Again GST is a non-issue if you're rental property runs like a business where you claim the maintenance expenses off the rental income. If the person is not declaring the rental income as taxable income, then it's fair they absorb the GST cost.

    If a person had $100 in gain and they're in the 33% tax bracket, (for simplicity) they would be paying $33 in tax. How complicated is that? In Canada and Australia, $50 of that gain is only taxable income so the take take would be only $16.50

    If Jacinda chooses a CGT to be a tax no different to wage income (or interest deposit income), then I would expect a huge shift of $ leaving NZ as places like Australia and abroad would be more welcoming for investments that incur capital gain. A rise in non-residency status by the wealthy, but unfortunately for the avg rental property investor, leaving NZ is just not convenient or possible.

  4. #494
    Legend minimoke's Avatar
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    Quote Originally Posted by SBQ View Post
    I still fail to see the complexities of CGT. In the past posts you mentioned determining the correct 'valuation' for CGT would be a major problem. But it doesn't seem an issue in countries that have CGT.
    Its not just me. The NZIER says, of valuation "This can become very complicated when, for example,assets have not been traded for a very long time. Inevitably, averages of one sort oranother are applied. This means some assets will be under-taxed and others overtaxed."

    Quote Originally Posted by SBQ View Post
    'Inflation' it's not added in the picture in terms of comparing different investments assets because inflation is compared equally across everything. It's the fault of the person that chooses to earn income from ie. cash term deposit than instead of higher risk ventures like stocks or rental properties, when it's clear the former gets the person less after tax income.
    The later is only positively impacted if there is a gain from the risk. And thats not always the case - thats why its called risk

    Quote Originally Posted by SBQ View Post
    Again GST is a non-issue if you're rental property runs like a business where you claim the maintenance expenses off the rental income. If the person is not declaring the rental income as taxable income, then it's fair they absorb the GST cost.
    Its an issue with the asset class. If you have your capital in a property GST is generated. If you have it in say shares there is no GST because no money is being spent on the upkeep of the capital

    Quote Originally Posted by SBQ View Post
    If a person had $100 in gain and they're in the 33% tax bracket, (for simplicity) they would be paying $33 in tax. How complicated is that? In Canada and Australia, $50 of that gain is only taxable income so the take take would be only $16.50
    As I pointed out, that is taxing 100% of the non inflation gain.

    Quote Originally Posted by SBQ View Post
    If Jacinda chooses a CGT to be a tax no different to wage income (or interest deposit income), then I would expect a huge shift of $ leaving NZ as places like Australia and abroad would be more welcoming for investments that incur capital gain. A rise in non-residency status by the wealthy, but unfortunately for the avg rental property investor, leaving NZ is just not convenient or possible.
    There will be a pile of known and unintended consequences. Is it really worth it for the $1b or so in extra tax they hope to generate.

  5. #495
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    Quote Originally Posted by minimoke View Post
    ...

    Its an issue with the asset class. If you have your capital in a property GST is generated. If you have it in say shares there is no GST because no money is being spent on the upkeep of the capital

    As I pointed out, that is taxing 100% of the non inflation gain.

    There will be a pile of known and unintended consequences. Is it really worth it for the $1b or so in extra tax they hope to generate.
    Some investors in shares have their shares in a custodial service sometimes with fees paid either at a flat rate or as a % of the value for the custody and sometimes an extra % paid for additional “advice”. So they also pay GST.

    Currently investors in fixed interest investments have all the return taxed as income (including the inflation component.)

  6. #496
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    Quote Originally Posted by Bjauck View Post
    Some investors in shares have their shares in a custodial service sometimes with fees paid either at a flat rate or as a % of the value for the custody and sometimes an extra % paid for additional “advice”. So they also pay GST.
    No matter what system there will always be exceptions. And with those exceptions come opportunities to avoid - which is every tax payers responsibility.

  7. #497
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    Quote Originally Posted by minimoke View Post
    No matter what system there will always be exceptions. And with those exceptions come opportunities to avoid - which is every tax payers responsibility.
    Isn’t that a reason behind the tax review in the first place.

    Leveraged investment in residential real estate had provided the opportunity to minimise income tax (by minimising the income from rent) whilst maximising the leveraged return from untaxed capital gain. With that opportunity also being a big factor in there being less household capital available for NZ shares resulting in the small share market and many listings crossing the Tasman.

  8. #498
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    Quote Originally Posted by Bjauck View Post
    Isn’t that a reason behind the tax review in the first place.

    Leveraged investment in residential real estate had provided the opportunity to minimise income tax (by minimising the income from rent) whilst maximising the leveraged return from untaxed capital gain.
    In what way does that differ from a leveraged investment in shares?

  9. #499
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    Quote Originally Posted by Bjauck View Post
    Isn’t that a reason behind the tax review in the first place.

    .
    No. Labour is hell bent on introducing a CGT under the misguided principle of "fairness" (definition = wealth re-distribution

  10. #500
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    Default >>>>>>>>>>>>>>>>>>>>>>>>>>

    Overall the CGT in its current form is going hurt the average kiwi battler(esp the new investors looking to make their first investments in property) more so than the well-off they think will take the brunt of the extra TAX...

    For me personally, this CGT plan won't affect us much at all.. I don't have a Kiwi saver ... I trade shares within a company structure so pay tax anyway as does anyone they trades shares or crytpo / bullion /art etc..

    and have speculated with property in the past so tainted anyway now and bright line test is 5yrs so speculators are caught these days anyway...

    And you add in the fact Capital values of most of NZ property is at record highs in this long bull cycle more likely those selling over the next decade may well take a loss and need tax rebates ,,


    in 2016 the US-based Tax Foundation ranked New Zealand’s overall tax system as second in the developed world for its competitiveness - and top for its individual (personal) taxes.

    then along comes Cindy >>>
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

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