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  1. #181
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    Quote Originally Posted by dobby41 View Post
    Would be good - and productive too.
    ...
    I thought one had to start the business for it to be a productive investment. Buying a second hand business, or buying a second-hand shareholding in a company that runs a business, was not productive. However, in addition, is it also if you buy an established business and work in the business too., then it is also productive. If you buy an existing business but get a manager to run it, then it is not a productive investment. Do I correctly understand the point (which I disagree with) you were making previously?
    Last edited by Bjauck; 08-12-2020 at 08:13 AM.

  2. #182
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    Quote Originally Posted by dobby41 View Post
    Would be good - and productive too.
    Unfortunately many people buying rental property wouldn't have the nouse to run a small business. Residential property is much easier.
    Annd many people who buy a small business should have had the nouse not to.

  3. #183
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    Quote Originally Posted by Bjauck View Post
    I thought one had to start the business for it to be a productive investment. Buying a second hand business, or buying a second-hand shareholding in a company that runs a business, was not productive. However, in addition, is it also if you buy an established business and work in the business too., then it is also productive. If you buy an existing business but get a manager to run it, then it is not a productive investment. Do I correctly understand the point (which I disagree with) you were making previously?
    Starting one is the best way but I expect that if they brought an existing one they would probably add to it.
    You are pushing the suggestion that I made (to start the debate) but getting an existing manager to manage it is similar, but not the same, as buying an existing share. In a small business, even with a manager running it, you probably add to the investment. With an existing share you only add to it if the company wants to increase capital.

    I don't see investing in residential property as being non-productive - you end up paying a lot of money on repairs and maintenance (both of which help the productive economy). Yet people keep trying to say that property investment is non-productive?

  4. #184
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    Quote Originally Posted by dobby41 View Post
    ...

    I don't see investing in residential property as being non-productive - you end up paying a lot of money on repairs and maintenance (both of which help the productive economy). Yet people keep trying to say that property investment is non-productive?
    I guess with residential property if you pay $1,000,000 for a house (land worth $700,000; building and other improvements worth $300,000) then you are getting a $300,000 asset which produces shelter whether you pay $700,000 for the land or $100,000 for the land.

    Certainly when it comes to owner-occupiers, It makes no sense not to tax the net product of a residential property producing a net benefit (shelter) for an owner-occupier while fully taxing the net product of a business that produce a net benefit (income, ability to eat and clothe) to the owner-operator.

    The initial investment or purchase of shares keeps the business alive when the start-up investors/shareholders wish to to retreat. What you may be referring to is subsequent injections of capital - or retention from annual net income - to maintain assets. In relation to a shareholding that would be retaining earnings within the business (which NZ companies are very poor at doing for various reasons.) NZ companies would also raise money from shareholders by way of a placement or rights issue.
    Last edited by Bjauck; 08-12-2020 at 10:44 AM.

  5. #185
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    Quote Originally Posted by fungus pudding View Post
    Annd many people who buy a small business should have had the nouse not to.
    This may have been covered before, but can someone more experienced or informed than myself answer this question.
    If borrowing to buy shares, via mortgage security, is the interest component tax deductible?

  6. #186
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    It is if they were brought for dividend income

  7. #187
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    Quote Originally Posted by Sgt Pepper View Post
    This may have been covered before, but can someone more experienced or informed than myself answer this question.
    If borrowing to buy shares, via mortgage security, is the interest component tax deductible?
    It is, but not restricted to mortgage security. It doesn't matter what the security is, and even if you can borrow with no security (from your grandmother or mistress ?) the interest is still a cost.

  8. #188
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    Fortunately the Prime Minister is up with the play. Or maybe not.

    Put to her that people who invest in shares, for example, don’t always expect the value of that asset to go up, so why should it be different for housing? Ardern responded: “This gets to the heart of the issue of why so many New Zealanders turn to the housing market.”Ardern then walked off stage, having previously signalled she was taking last questions at her post-Cabinet press conference.

    Whew, saved by the bell.

    https://www.interest.co.nz/property/...-when-it-comes

  9. #189
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    " As Clint Smith notes, interest deductions at present are, with the exception of the thin capitalisation rules, generally fully allowable if incurred in deriving gross income. The deduction relates to the rental income that is being earned from the underlying property being financed.

    However, as the argument for greater application of section CB 6 notes the economic returns from property are twofold. Firstly, in the form of taxed rental income and secondly in untaxed capital growth. The present treatment, therefore, gives an allowable interest deduction for both taxed and untaxed gains. "
    https://thespinoff.co.nz/politics/08...+December+2020

  10. #190
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    Quote Originally Posted by artemis View Post
    Fortunately the Prime Minister is up with the play. Or maybe not.

    Put to her that people who invest in shares, for example, don’t always expect the value of that asset to go up, so why should it be different for housing? Ardern responded: “This gets to the heart of the issue of why so many New Zealanders turn to the housing market.”Ardern then walked off stage, having previously signalled she was taking last questions at her post-Cabinet press conference.

    Whew, saved by the bell.

    https://www.interest.co.nz/property/...-when-it-comes
    I guess if it is government and central bank guaranteed then why would you invest in anything other than rental houses. Sadly some young people might see Jacinda Ardern as an advocate for youth but they would be sadly mistaken. She is little different to John Key as far as I can tell.

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