nz shares or property

[Bjauck]

I'm amazed that the government (or councils) make bugger all from property sales. Imagine how much a graduated stamp duty tax would bring in! Starting at 2% at $500,000 and over and gradually moving up to 5% on $1,000,000 .... Auckland could have that new harbour crossing paid for in weeks ;o)

very little tax is made from residential property investment as most gains are untaxed capital gains. Even when tax is paid in the form of rates, they are often paid grudgingly,,,At the very least perhaps, stamp duties could be paid on investor and foreign purchases.

By my rough calculation it works out out at 20% compounding return/yr
Infratil is close to that

IFT is definitly one of my better investments, However it was floated in the 1990's whereas Skid bought his house in 1984. It would have been interesting to see how IFT would have coped with the 1987 meltdown.

Your right its a great return,although there has been no return,except managing tenants--It started out as our family home and something I could put my energy into--I didnt leverage as some do--and agree with some of your points,but so far Ive been taxed just like with shares--but the market HAS gone a bit crazy and it cant continue --Thats why at this point its a much harder decision(although at the time we didnt know this was going to happen with prices)--It could also crash as well..who knows.
I got lucky with prices ,but if you saw the house before ,you wouldnt recognize it --there are still places where houses are relatively cheap,but you would have to adjust your lifestyle to be in a different area....well..gotta go ..Ive just lost a tenant,and the other one doesnt knoiw how to change a light bulb.

A great investment and amazing that you could do it without leveraged finance. You put in hard work to turn it around - and have got a good return for your efforts. Most of that return has added value - mostly capital value - to your property, which will not be taxed when you sell. Similarly you have enjoyed periods of increasing land values. Other people work hard and their effort is rewarded by earning a high income, all of which is taxed. Society needs to determine if that is fair.

As you say maintaining a rental property, if you do it yourself, does require hard work and there can be periods when you do not have a tenant.

As property has increased in value so much more than inflation and incomes since 1984, I wonder if people could do what you did, without needing to borrow.

Certainly unleveraged landlords could pay more in the way of income tax as they do not deduct interest charges from rental income. However rental returns would still be a minor part of their total investment returns and the expectation of capital appreciation must be a dominating motivating factor especially in a market like Auckland where average gross rental return is about the same as a 1 yr term deposit interest rate.