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rezoning of land - tax

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  • rezoning of land - tax

    Hi, I just found this article

    Does anyone have any experiences in dealing with this in reality

  • #2
    Sorry, found the info I was looking for in existing thread


    • #3
      The math in that article is terrible.

      So if you bought a property six years ago for $400,000, and due to capital gain in the Auckland market, it is now worth $600,000. However, after the rezoning is complete, the property is valued at $800,000 - as it is now in a mixed housing zone and could have multiple townhouses built on it. Which means, since purchasing it, the value has increased by 100 per cent.

      But as $200,000 was just normal capital gain, only the increase from the Unitary Plan is subject to income tax if it is over 20 percent, which in this case it is 50 per cent. Nope. 33%. 200k/600k. But still over 20% regardless.

      However there is another equation that you will need to work out - for every full year of ownership the amount of profit subjected to tax is reduced by 10 per cent, meaning if you have owned the property for 10 years or more, then no tax is payable. So for the example above, only 40 per cent of the total profit is taxable - resulting in a taxable income of $160,000.
      Nope. 80k. 200k x 40%. Less any costs of selling, also apportioned.

      ...But I guess it's a positive that articles like this are bringing tax law to people's attention, anyway.
      AAT Accounting Services - Property Specialist - [email protected]
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