sharetrader

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

Voters
103. You may not vote on this poll
  • No

    202 100.00%
  • Yes

    60 58.25%
  • Goff is just an idiot

    2,147,483,655 100.00%
  • Epic fail for Labour

    1,930 100.00%
Multiple Choice Poll.
Page 35 of 39 FirstFirst ... 25313233343536373839 LastLast
Results 511 to 525 of 571
  1. #511
    Advanced Member
    Join Date
    Aug 2012
    Posts
    1,796

    Default

    Quote Originally Posted by elZorro View Post
    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.

  2. #512
    Legend minimoke's Avatar
    Join Date
    Mar 2005
    Location
    Christchurch, New Zealand.
    Posts
    6,375

    Default

    Quote Originally Posted by elZorro View Post
    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?

  3. #513
    Legend
    Join Date
    Jun 2009
    Location
    CNI area NZ
    Posts
    6,149

    Default

    Quote Originally Posted by Bjauck View Post
    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.

  4. #514
    Advanced Member
    Join Date
    Aug 2012
    Posts
    1,796

    Default

    Quote Originally Posted by elZorro View Post
    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.
    Last edited by Bjauck; 11-03-2019 at 09:15 PM.

  5. #515
    Legend minimoke's Avatar
    Join Date
    Mar 2005
    Location
    Christchurch, New Zealand.
    Posts
    6,375

    Default

    Quote Originally Posted by elZorro View Post
    My point is that the household residence isn't such a great investment, on paper. .
    I bought my original residence for $52,000. my Current one is significantly much more than that - and that has been a deliberate plan to buy / sell upwards on the property "ladder". Of course there have been costs along the way. But the capital gain has been huge.

    I havent given it a lot of thought yet because I need to see the final CGT policy. But I will look art the option of cashing up some lesser performing investments and trading up to a new "expensive" home and then look at reverse equity loans to release the capital. Who owns the family home will depend on the most efficient tax structure - I may sell it into a company.

  6. #516
    Legend
    Join Date
    Jun 2009
    Location
    CNI area NZ
    Posts
    6,149

    Default

    Quote Originally Posted by Bjauck View Post
    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?

  7. #517
    Advanced Member
    Join Date
    Aug 2012
    Posts
    1,796

    Default

    Quote Originally Posted by elZorro View Post
    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.

  8. #518
    Member
    Join Date
    Nov 2018
    Location
    Christchurch
    Posts
    149

    Default

    Yeh i'll have to agree that the banks are not stupid when it comes to lending. They know it's FAR less riskier to lend on residential homes than on commercial (which only have a business focus and having more risk).

    I don't buy into the argument of funneling all your $ into your home by buying a mansion size expensive home. That recipe just doesn't work because higher end / pricier homes are far and few and attract less capital gain over the long term. The reality what makes prices go is simply location. The largest house with the largest investment of it's kinds means nothing if it's in a poor location. Even in a new sub-divisions one would be foolish to build extravagant when there's no knowing what the demand will be in 10 or 20 years time (ie. Pegasus area north of Christchurch). While i'm all for home owners to improve the value of their own home, I don't believe CGT exemption on the principle residence would cause many to up-scale their house (especially when it's a common trend for seniors to 'down scale' by selling their 4 bedroom home to a small 2 bedroom 'elderly person unit' type housing). and if you want to get rid of your house by doing a 'reverse-equity' mortgage ; each to their own.

    NZ's tax system is not like the US where are no exemption of CGT on the principle residence. But then they're allowed all sorts of goodies like deducting their mortgage interest rate off their income, and capital losses that can be applied forward and back (again something the TWG has not talked about). Therefore, it would be more prudent for NZ to have a more comparable tax system such as in Australia (or UK colonies) where they allow a CGT exemption on the principle residence.

    I would not be surprised if Princess Leia is looking for a CGT model like Australia or Canada. The simplicity of NZ's tax system penalises the low and middle class and makes the equality gap wider. I'll reiterate, a simple tax on all people is not just for those that are not able. Those who are disabled clearly have the right to make a decent living and get into their own home without being a rental tenant for the rest of their lives. Those who are more skilled and affluent deserve to pay more taxes but do so by structuring their assets in the form of paying CGT (of course this approach is meaningless if the tax rate on CGT = the person's tax bracket).

  9. #519
    Legend minimoke's Avatar
    Join Date
    Mar 2005
    Location
    Christchurch, New Zealand.
    Posts
    6,375

    Default

    Quote Originally Posted by SBQ View Post

    I don't buy into the argument of funneling all your $ into your home by buying a mansion size expensive home. That recipe just doesn't work because higher end / pricier homes are far and few and attract less capital gain over the long term. The reality what makes prices go is simply location. The largest house with the largest investment of it's kinds means nothing if it's in a poor location.
    Location, or more specifically future demand is the key to the recipe - and it will help ensure the recipe work

    Quote Originally Posted by SBQ View Post
    Even in a new sub-divisions one would be foolish to build extravagant when there's no knowing what the demand will be in 10 or 20 years time (ie. Pegasus area north of Christchurch).
    A golden rule is to avoid new subdivisions - simply because you dont know who your neighbours are going to be.

    Quote Originally Posted by SBQ View Post
    While i'm all for home owners to improve the value of their own home, I don't believe CGT exemption on the principle residence would cause many to up-scale their house
    People will be wise to put their money in places that secure their capital it the most effective way.

    Quote Originally Posted by SBQ View Post
    (especially when it's a common trend for seniors to 'down scale' by selling their 4 bedroom home to a small 2 bedroom 'elderly person unit' type housing). and if you want to get rid of your house by doing a 'reverse-equity' mortgage ; each to their own.
    All these people are doing is releasing their own capital for their own benefit

    Quote Originally Posted by SBQ View Post
    NZ's tax system is not like the US where are no exemption of CGT on the principle residence. But then they're allowed all sorts of goodies like deducting their mortgage interest rate off their income, and capital losses that can be applied forward and back (again something the TWG has not talked about).
    Comparing others tax system is only of academic interest - and not part of this governments agenda. They apparently want a "Fairer" system

    Quote Originally Posted by SBQ View Post
    Therefore, it would be more prudent for NZ to have a more comparable tax system such as in Australia (or UK colonies) where they allow a CGT exemption on the principle residence.
    Other than trade, we dont need a comparable system. We need one that is efficient - like NZ's GST

    Quote Originally Posted by SBQ View Post
    I would not be surprised if Princess Leia is looking for a CGT model like Australia or Canada. The simplicity of NZ's tax system penalises the low and middle class and makes the equality gap wider. I'll reiterate, a simple tax on all people is not just for those that are not able.
    A tax system should apply equally to all people - that is fair. The more you profit teh more tax you will pay. That is fair.

    Quote Originally Posted by SBQ View Post
    Those who are disabled clearly have the right to make a decent living and get into their own home without being a rental tenant for the rest of their lives.
    They dont have a right at all. They have an opportunity. As does everyone else.

    Quote Originally Posted by SBQ View Post
    Those who are more skilled and affluent deserve to pay more taxes but do so by structuring their assets in the form of paying CGT (of course this approach is meaningless if the tax rate on CGT = the person's tax bracket).
    No-one deserves to pay tax. It is simply a burden we must all bear and we should all bear it equally and fairly.

    One thing is sure in life - we need a roof over our heads when we stop earning - ie retire.

    How is it fair I can put my money into an eventual mortgage free residential property and pay no capital gain as I release that capital. Compared with a renter, who ought to be putting their non-housing savings into a Superannuation, Kiiwsaver or other capital investment scheme , only to be taxed when they release that capital to pay for that roof in retirement

  10. #520
    Advanced Member
    Join Date
    Aug 2012
    Posts
    1,796

    Default

    Quote Originally Posted by minimoke View Post

    How is it fair I can put my money into an eventual mortgage free residential property and pay no capital gain as I release that capital. Compared with a renter, who ought to be putting their non-housing savings into a Superannuation, Kiiwsaver or other capital investment scheme , only to be taxed when they release that capital to pay for that roof in retirement
    I agree. To exempt the family home from CGT and income tax on imputed rent, whilst subjecting other investments, business, shares and KiwiSaver investments to a CGT and Tax on income earned will make the purchase of a family home the de facto tax efficient pension scheme for those that can afford it. How long would it be before the NZX would close up shop?
    Last edited by Bjauck; 12-03-2019 at 08:31 AM.

  11. #521
    Legend minimoke's Avatar
    Join Date
    Mar 2005
    Location
    Christchurch, New Zealand.
    Posts
    6,375

    Default

    Quote Originally Posted by Bjauck View Post
    I agree. To exempt the family home from CGT and income tax on imputed rent, whilst subjecting other investments, business, shares and KiwiSaver investments to a CGT and Tax on income earned will make the purchase of a family home the de facto tax efficient pension scheme for those that can afford it. How long would it be before the NZX would close up shop?
    Two consequences.

    NZ'ers will look for capital investment opportunities overseas on, say, ASX.

    Second usual supply demand principle will see increased demand for upscale residential housing which will push up prices which will see holders in NZ residential property get larger tax free capital gain.

  12. #522
    Legend
    Join Date
    Jun 2009
    Location
    CNI area NZ
    Posts
    6,149

    Default

    Quote Originally Posted by Bjauck View Post
    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.
    I don't think they'll use the marginal tax rates with the CGT, and they'll have to be very careful around businesses and share portfolios, as you say.

    But the difference between a landlord's rented house and a private dwelling is stark. In the first situation a paper transaction can be made, leveraged against other property, and over the full term the landlord pays nothing to hold that asset, they even derive a small income from each property. Tax losses from earlier years defray their income tax. The private dwelling is more expensive to hold onto than renting something equivalent, for the average household. They might not pay rent, but they have to pay interest and usually some capital too, out of tax-paid income. If you really look hard at all the costs associated with owning a home and redecorating or adding on, in many cycles there really is no return on that spending and effort. But, that home is worthy capital to borrow against for other projects, and it gives the household stability.

    The govt cannot undo that incentive to home ownership by imposing a CGT on it.

  13. #523
    Guru
    Join Date
    Apr 2008
    Location
    Sth Island. New Zealand.
    Posts
    4,498

    Default

    Quote Originally Posted by elZorro View Post
    I don't think they'll use the marginal tax rates with the CGT, and they'll have to be very careful around businesses and share portfolios, as you say.

    But the difference between a landlord's rented house and a private dwelling is stark. In the first situation a paper transaction can be made, leveraged against other property, and over the full term the landlord pays nothing to hold that asset, they even derive a small income from each property. Tax losses from earlier years defray their income tax. The private dwelling is more expensive to hold onto than renting something equivalent, for the average household. They might not pay rent, but they have to pay interest and usually some capital too, out of tax-paid income. If you really look hard at all the costs associated with owning a home and redecorating or adding on, in many cycles there really is no return on that spending and effort.
    That pretty much sums up renting out residential property. The owner occupier however gets the return of rent-free accommodation.

  14. #524
    Guru
    Join Date
    Feb 2005
    Location
    Auckland, , New Zealand.
    Posts
    2,623

    Default

    Quote Originally Posted by elZorro View Post
    I don't think they'll use the marginal tax rates with the CGT, and they'll have to be very careful around businesses and share portfolios, as you say.
    Marginal rates is what they want and what the TWG came up with. Remember the TWG was told what the result was to be.

  15. #525
    Legend minimoke's Avatar
    Join Date
    Mar 2005
    Location
    Christchurch, New Zealand.
    Posts
    6,375

    Default

    Quote Originally Posted by 777 View Post
    Marginal rates is what they want and what the TWG came up with. Remember the TWG was told what the result was to be.
    Which will only be another shot at the "poor" people as they are elevated into the next tax bracket on the sale of what little capital they may have.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •