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

Voters
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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. #311
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    Quote Originally Posted by elZorro View Post
    FP, thought you'd like the idea of a rollover being mooted (perhaps have to reinvest in a similar area). Can't see how they'll ever collect any CGT if that is the case. Maybe you'd be allowed to buy a vintage car or other asset that is likely to still increase in value. Or even put the capital gain into a savings account? Labour must be worried about having National undo it all. Sounds to me like the tax accountants will be happy to provide answers here.
    As far as I know the roll over tax so far is only suggested for business sales.(I think the common term where it exists is 'a repatriation clause') It should apply to all assert classes where CGT is proposed in my opinion, so CGT would only apply on exiting that class of investment. There are good reasons for that, but that's covering old ground. I don't think National would ever undo CGT if it gets established as evidenced by their about turn on their hinted intention of undoing Labour's GST. No doubt you remember Bolger waffling about a transfer tax. Fortunately that's long forgotten, and I for one hope our GST remains in its current simple form. Govt's don't abandon tax schemes - they just try and find better ways to spend it. Forget vintage cars, art and similar nonsense - rest assured it will only apply to income earning assets with the one exemption being a holiday or second home)

  2. #312
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    Quote Originally Posted by fungus pudding View Post
    [snip] Forget vintage cars, art and similar nonsense - rest assured it will only apply to income earning assets with the one exemption being a holiday or second home)
    Which includes capital gains on shares (assets). I wonder how people will feel about losing their marginal tax rate on their capital gains on shares when they sell them, or when their estate sells them. I think it sucks.

  3. #313
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    Quote Originally Posted by Baa_Baa View Post
    Which includes capital gains on shares (assets). I wonder how people will feel about losing their marginal tax rate on their capital gains on shares when they sell them, or when their estate sells them. I think it sucks.
    Plenty of people pay income tax on shares they sell now, and of course that's at marginal tax rates. If you are deemed to be a trader you will pay tax on profits, whether it's cars, houses, shares, second hand furniture, holes to put in swiss-cheese, or widgets you're selling.
    Last edited by fungus pudding; 21-02-2019 at 09:01 PM.

  4. #314
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    Quote Originally Posted by fungus pudding View Post
    Plenty of people pay income tax on shares they sell now, and of course that's at marginal tax rates. If you are deemed to be a trader you will pay tax on profits, whether it's cars, houses, shares, second hand furniture, holes to put in swiss-cheese, or widgets you're selling.
    Fair comment, re dividends tax, but you cleverly avoided the investor who didn't intend to sell (when they bought) but for some some reason they eventually were sold. Boom .. CGT rips a massive 'marginal tax rate' hole in your/their capital gains.

    Interested in what investors think about this. If you take for example a high capital growth share like XRO or ATM, and say you put $50k in the early days and make a few millions out of it, how do you feel about a tax bill of a few $ hundred thousands or a million or so when you or your estate sell it?

  5. #315
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    Quote Originally Posted by SBQ View Post
    You're missing the MAJOR distinction between taxing of necessities vs taxing of large size wealth. After all, pretty much EVERY OECD nation treats CGT differently to income tax rates. Why? Show me a country that applies CGT exemption limits each year? How would that be particularly useful to the person that owns no assets? Therefore, I don't see your argument that the principal resident should not be exempt as it would be the single source of asset a person can hold, and more importantly, not having to worry about selling for a capital LOSS (consider those that move from place to place every 5 or 10 years?) and then pay another round of CGT when the market rebounds.

    I also do not buy into the argument about those choosing NOT to buy a house and instead, invest their savings elsewhere (ie managed funds). The fact is simple, those that can't afford to buy a house simply do NOT have the $ to save ; what % of those on minimum wage actually contribute to Kiwi Saver? Very few because that 3% they lose off their total annual income would be better spent in putting food on the table. The approach of CGT by other wealthy nations is aimed none other than the wealthy ; the NZ top 5% of the population that has parked their $ in real estate, banking it without having to worry about paying tax on the gain.
    There are people who have decided to invest in and build up businesses rather than buying their own homes. Why not give them a tax break too as good as home-owners get?

    If you own a mortgage-free $3m home you are indeed wealthy. Every country that exempts the “family home” applies a CGT exemption. Exempting what can be a multi-million dollar asset, is an exemption for the wealthy.

  6. #316
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    Quote Originally Posted by couta1 View Post
    There is no way they will get this thing through at your marginal tax rate, I'd put money on it.
    The whole thing is going to fail. Too many hurdles to get over. The first being Winston. If it is still proposed by the election then they will be out. The concern is if they say that it won't happen, then get re elected with the kermits, they will just do it anyway.

  7. #317
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    Quote Originally Posted by Bjauck View Post
    There are people who have decided to invest in and build up businesses rather than buying their own homes. Why not give them a tax break too as good as home-owners get?

    If you own a mortgage-free $3m home you are indeed wealthy. Every country that exempts the “family home” applies a CGT exemption. Exempting what can be a multi-million dollar asset, is an exemption for the wealthy.
    Very true. And if you own it with a mortgage, you're probably wealthier. The introduction of a CGT with the glaring omission of the primary home will inevitably lead to an explosion of luxury homes - or 'mansions'.

  8. #318
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    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.

  9. #319
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    Quote Originally Posted by RTM View Post
    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
    Correct - its not inflation adjusted. And its not adjusted to reflect the value of your person, un-charged labour, that goes into it.

    Problem with this of course is that government has the job of managing inflation. So coffers get a bit low, just tweak inflation levers to give it a boost.

  10. #320
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    Quote Originally Posted by RTM View Post
    Pretty sure I read that it is not inflation adjusted. This seems to be a major flaw. e.g. Say you owned a rental house for 10 years then sold it and it only appreciated at the rate of inflation.
    The CGT would then put you miles behind when you sold it as you would lose the tax part of your "inflation" gain.
    And if it fell below inflation - surely we should get a tax refund.

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