Capital Gains Tax

[fungus pudding]

Good onya. I have sent emails to Duncan Webb and Ruth dyson fully supporting CGT on the family home.

I have done likewise to Grant Robertson. Specifically pointing out if CGT does proceed and also covers the family home, it would raise meaningful revenue, thus allowing a meaningful drop in income tax - and if it's considered fair to tax gains from property, then treat all property equally rather than just play with it.

[elZorro]

I have done likewise to Grant Robertson. Specifically pointing out if CGT does proceed and also covers the family home, it would raise meaningful revenue, thus allowing a meaningful drop in income tax - and if it's considered fair to tax gains from property, then treat all property equally rather than just play with it.

Do you think they are crazy enough to give solid weighting to disingenuous advice from property investors FP? The standard household home was never in the CGT equation in any case. And I don't think that would lead to any investor worth their salt, over-investing in the family home, as it would be a waste of good capital. All property is being treated fairly, unless you'd consider not being able to add interest paid and other ownership costs into your annual tax return for your property portfolio.

Other dastardly options for landlords:

https://www.newshub.co.nz/home/polit...ichardson.html

https://www.newshub.co.nz/home/polit...or-labour.html

[minimoke]

Other dastardly options for landlords:

https://www.newshub.co.nz/home/polit...ichardson.html

https://www.newshub.co.nz/home/polit...or-labour.html

Renters just have to look forward to increases. Labour has changed how property management fees are charged - so loading up rent. They are insisting on minimum housing standards so cost will be loaded onto rent. Nothing wrong with landlords now wanting to manage their capital risks by cashing up any potential gain by loading up rents.

[elZorro]

Renters just have to look forward to increases. Labour has changed how property management fees are charged - so loading up rent. They are insisting on minimum housing standards so cost will be loaded onto rent. Nothing wrong with landlords now wanting to manage their capital risks by cashing up any potential gain by loading up rents.

I can see you have the mantra spot-on, MM. It's only fair that the tenants will pay for every last cent of your investment, and more.

Attachment 10386

[minimoke]

I can see you have the mantra spot-on, MM. It's only fair that the tenants will pay for every last cent of your investment, and more.

The tenants are paying for a service - why would they not pay for the costs associated with that service. Who else would?

[Bjauck]

Do you think they are crazy enough to give solid weighting to disingenuous advice from property investors FP? The standard household home was never in the CGT equation in any case. And I don't think that would lead to any investor worth their salt, over-investing in the family home, as it would be a waste of good capital. All property is being treated fairly, unless you'd consider not being able to add interest paid and other ownership costs into your annual tax return for your property portfolio.

Other dastardly options for landlords:

https://www.newshub.co.nz/home/polit...ichardson.html

https://www.newshub.co.nz/home/polit...or-labour.html

In the NZ context, the fact that the principal household home was not part of the TRG’s terms of reference exempts a significant proportion of household wealth. Nothing should have been off-limits. Our political masters would have decided what to ignore in the report anyway. Just as they are going to do with the actual report.

Why shouldn’t those who, instead of investing their equity and the banks money in a house, invest their equity in a business that earns taxable income and employs other people also have their capital gains on their equity exempted?

Why wouldn’t people over-invest in the exempt household residence? It could be more tax efficient (no income tax or capital gains) than KiwiSaver in its current form.

[elZorro]

In the NZ context, the fact that the principal household home was not part of the TRG’s terms of reference exempts a significant proportion of household wealth. Nothing should have been off-limits. Our political masters would have decided what to ignore in the report anyway. Just as they are going to do with the actual report.

Why shouldn’t those who, instead of investing their equity and the banks money in a house, invest their equity in a business that earns taxable income and employs other people also have their capital gains on their equity exempted?

Why wouldn’t people over-invest in the exempt household residence? It could be more tax efficient (no income tax or capital gains) than KiwiSaver in its current form.

My point is that the household residence isn't such a great investment, on paper. Running a business or property investment portfolio does allow some tax benefits along the way. But I certainly agree that a business has a harder road to success, and wouldn't want to see the marginal tax rate on that gain, unless it was at some quite high threshold, and/or generated over a short time, as Labour proposed years ago.

[Bjauck]

My point is that the household residence isn't such a great investment, on paper. Running a business or property investment portfolio does allow some tax benefits along the way. But I certainly agree that a business has a harder road to success, and wouldn't want to see the marginal tax rate on that gain, unless it was at some quite high threshold, and/or generated over a short time, as Labour proposed years ago.

I disagree in relation to the principal household residence. It is a great investment. Your annual benefit is tax free. By investing in the house it means that you do not have to pay rent out of tax-paid income. You can obtain a mortgage to leverage capital gain or obtain a retirement capital release at reasonable rates, the funds from which enable your purchase of other assets if you want. If there is a CGT and the principal home is exempt, that would be an extra benefit.

Also with asset testing for long-term care, the owner-occupied main home is exempt if there is a spouse not in care. That could mean a substantial nest egg available for the surviving spouse, which may not be available if the couple had invested in financial assets, shares or a business instead and which would not have been exempted from asset testing.

[elZorro]

I disagree in relation to the principal household residence. It is a great investment. Your annual benefit is tax free. By investing in the house it means that you do not have to pay rent out of tax-paid income. You can obtain a mortgage to leverage capital gain or obtain a retirement capital release at reasonable rates, the funds from which enable your purchase of other assets if you want. If there is a CGT and the principal home is exempt, that would be an extra benefit.

Also with asset testing for long-term care, the owner-occupied main home is exempt if there is a spouse not in care. That could mean a substantial nest egg available for the surviving spouse, which may not be available if the couple had invested in financial assets, shares or a business instead and which would not have been exempted from asset testing.

In that case, why not do things the normal way, and buy a home first (or get into a leveraged home) and then start a business with the home as security? It would be less flexible and more expensive per week than renting, but maybe it would be better overall, as you say. Would you then think differently about working on that home, constantly improving it with tax-paid income and paying all that interest with tax-paid income, if the capital gain on the home that you also used for business finance security was to be taxed?

[Bjauck]

In that case, why not do things the normal way, and buy a home first (or get into a leveraged home) and then start a business with the home as security? It would be less flexible and more expensive per week than renting, but maybe it would be better overall, as you say. Would you then think differently about working on that home, constantly improving it with tax-paid income and paying all that interest with tax-paid income, if the capital gain on the home that you also used for business finance security was to be taxed?

It may have been normal back in the day to buy a home when still young and then use that asset as collateral for a business. Certainly in Auckland that Avenue is more for the wealthy family member or for those on high incomes and good luck in trying to obtain a mortgage with sufficient funds available to invest in a business in addition to being able to afford the house itself.

A business or shares bought and added to with tax paid income should have the net income taxed and capital gains taxed but an owner-occupied home that is not liable to tax on net imputed rent should also not be liable for capital gains? I do not see the logic or fairness in that.