Housing Tax

[artemis]

There is no difference between tax treatment of trading houses and shares and other assetts already. In spite of all the largely ignorant commentary, they are all treated the same.

Correct, but marginal income tax rate on profits is likely to be a lot more than any CGT - Labour's previous very messy policy was 15% CGT.

Can't see any proposed CGT being in the 28%-33% range, so traders will be very very happy.

Labour's CGT proved electoral poison at 15% ....

[fungus pudding]

Correct, but marginal income tax rate on profits is likely to be a lot more than any CGT - Labour's previous very messy policy was 15% CGT.

Can't see any proposed CGT being in the 28%-33% range, so traders will be very very happy.

Labour's CGT proved electoral poison at 15% ....

Except they are likely to apply income tax to habitual traders, builders, developers and so on.

[westerly]

There is no difference between tax treatment of trading houses and shares and other assetts already. In spite of all the largely ignorant commentary, they are all treated the same.

Really? Quote from "newsroom " article.

"Currently, regular 'Mum and Dad' investors know that leveraged investments in property are not subject to capital gains, unless they are in rental properties sold within two years of purchase. Given the doubling of house and land prices over the last 12 years and their ability to easily borrow to buy these assets, buying more property has been a no brainer. They know that investing their savings in a term deposit or an investment fund in the stock market would generate earnings that were taxed every year, either through withholding tax on interest or because income from buying and selling shares would be treated as income. They also can't borrow to invest in these assets. It's a simple choice that means households now have over $1 trillion invested in housing, while have just $163 billion in bank deposits and $56 billion in investment funds such as KiwiSaver."

westerly

[fungus pudding]

Really? Quote from "newsroom " article.

"Currently, regular 'Mum and Dad' investors know that leveraged investments in property are not subject to capital gains, unless they are in rental properties sold within two years of purchase. Given the doubling of house and land prices over the last 12 years and their ability to easily borrow to buy these assets, buying more property has been a no brainer. They know that investing their savings in a term deposit or an investment fund in the stock market would generate earnings that were taxed every year, either through withholding tax on interest or because income from buying and selling shares would be treated as income. They also can't borrow to invest in these assets. It's a simple choice that means households now have over $1 trillion invested in housing, while have just $163 billion in bank deposits and $56 billion in investment funds such as KiwiSaver."

westerly

Profit from rental income is taxable, just as dividend income is. Costs incurred in generating income does not form part of the profit (i.e they are deductible) The same rules apply to all income generating investments. It is incorrect to say they cannot borrow to invest in other assets.

[blackcap]

Profit from rental income is taxable, just as dividend income is. Costs incurred in generating income does not form part of the profit (i.e they are deductible) The same rules apply to all income generating investments. It is incorrect to say they cannot borrow to invest in other assets.

Correct. I borrowed $100k to buy a share investment post GFC. I can deduct the interest charges against my income, but I pay tax on dividends received. This investment is now worth $220k (yes equity markets have gone up a bit) and I have sold and pay no tax on the $120k gain. I do not see how the property market has advantages. Just a lot more costs.
I do the "accounting" for my partners rental portfolio. The returns even with the capital gains are pitiful compared with equities.

[artemis]

Really? Quote from "newsroom " article.

"Currently, regular 'Mum and Dad' investors know that leveraged investments in property are not subject to capital gains, unless they are in rental properties sold within two years of purchase. ......westerly

Quite correct. UNLESS they are deemed to be a trader within the IRD definition. In which case they are liable for income tax on profit on sale. Which is what fungus pudding said.

[artemis]

Except they are likely to apply income tax to habitual traders, builders, developers and so on.

They should, but will the government realise this, given their much publicised and uninformed views on CGT for 'speculators'.

If the expert tax group goes for a CGT (bet they will) then the legislation is to be passed this term for implementation next term (if they remain the government). The government might find it a bit trickier than a few bumper stickers.

I wonder how Australia treat traders vis a vis investors. Anyone know?

[Valuegrowth]

If we analyze assets everybody cannot get same capital gain or return. It all depends on the experience and knowledge on the industry and different types of assets. Both investors and traders not only make profit but also make losses. History should repeat for all types of assets in a different manner. What about 1987 crash? What about financial companies went into receiver ships mainly due to property investment in Auckland and Queens-town? How did some mum and dud lost money by investment in apartments in Auckland in the past?

I found very interesting link.

http://www.stuff.co.nz/business/mone...investors-make