Capital Gains Tax? Keep related posts in this thread, please.

[Bob Kane]

Have you seen that written somewhere or did you make it up all by yourself?

Not sure what you're referring to, Wayne.
I was just commenting on a post from Winston001.

[Perry]

Campaign Says Savers Overtaxed
Tom Pullar-Strecker
30/07/2014

Half of people's KiwiSaver earnings are being eaten up by tax, costing
the average retiree more than $100,000, according to the new campaign,
which is seeking a better deal for savers. Financial Services Council
chief executive Peter Neilson said income tax should be charged on the
interest that savers received after subtracting inflation, not on all
interest.

Age Concern chief executive Robyn Scott said taxing only the "real"
component of interest payments on term deposits would improve the
lifestyles of the elderly. "We think this is a fairness and equity
issue," she said. Taxpayers' Union executive director Jordan Williams
said the union's view was that taxing the inflation component of
interest was "taxing an income the consumer never gets to spend".

[jimO]

Capitol Gains Tax

if or when it comes in will it start from a certain date or be backdated to cover properties already owned when it comes in?

[speights boy]

If you are asking about the current Labour Party proposal, try post # 1597 of this thread.

[eri]

for something that would potentially affect many New Zealanders and not achieve any of its stated objectives

there has been very little useful discussion of whether we really need a capital gains tax - and there needs to be

..............

............. It was largely these concerns that led the Victoria University Tax Working Group to decide against

recommending the implementation of a capital gains tax in 2010.

Patrick Flannery is a lawyer with over 20 years experience in the taxation field and a lecturer in taxation at Massey University.

http://www.nzherald.co.nz/politics/n...ectid=11310433

[speights boy]

The apparent anomaly that a person can purchase a rental property, obtain tax deductions for any interest expense incurred in funding the purchase (and possibly other deductible expenditure as well), but still claim that any gain resulting on a sale of the property is on capital account, could be addressed by further targeted reform in this area.

This could include ring-fencing of the tax losses or a clawback mechanism on sale.

It is not necessary to introduce a capital gains tax to deal with the issue.

..........

[eri]

ring fencing

while not popular with heavily leveraged property investors

looks from here to be the most workable + acceptable approach if the concerns are valid

[flyernzl]

Capital gains tax not 'panacea' for housing crisis, Labour admits

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11305307

[elguapo]

They don't know why it doesn't work, but they are going to do it anyway!

[Wayne]

They don't know why it doesn't work, but they are going to do it anyway!

To be fair they never said it was to fix the housing crises - I think media and people here added that bit.
It is to 'level the playing field' - rightly or wrongly.

[Bluekiwi]

To be fair they never said it was to fix the housing crises - I think media and people here added that bit.
It is to 'level the playing field' - rightly or wrongly.

Yes they did.
They are playing to the man in the street that he cant afford a house as nasty evil property investors are buying up all the houses and pushing up prices making it un-affordable for new zealanders to buy their own house.
These investors the theory goes, are just speculators, buying not for rental return and yield, but purely for capital gain, that is created themselves along with the chinese pushing up prices, and paying no tax on that gain (sold or on paper).

Labour say that putting this capital gains tax on property will stop this evil and the reduced demand will lower auckland house prices so Joe Bloggs can afford to buy one.
This is exactly what they are saying.

And I really dont mind if they get in, whether now or next election.
As I will keep my rentals and pass on down the generations, and so will others.
This will reduce supply of housing on the market and push up house prices, which eventually push's up yields (bit by bit, dragged).
Will give me the equity I need to use where I like, you dont have to sell property to get money out

The only problem.
Is that the IRD computer system cant handle CGT, so its mute point.
The 5 Billion Upgrade to it to be able to do GST will cost a lot more than tax they get.

Silly labour, no brains.
If they want a simple plan.

Just Ring Fence, and put a Capital Gains tax levy on to the rates bill.

[spaceman]

To be fair they never said it was to fix the housing crises -...

As BK has already ....yes they did

It is to 'level the playing field' - rightly or wrongly.

What leveling is required exactly when the big man at the IRD reports to parliament that IP has no tax advantages and even in some cases is treated more harshly than other forms of investment????

The proposed CGT has been sold a "cure-all" to NZ's property woes and a poke in the eye to those evil landlords and speculators who are depriving average kiwis of a chance to own their own home.

Zero explanation on how exactly adding a tax to something is going to reduce it's price....the most common argument seems to be "everybody else has one we need one too"

From the article above

"I don't know why they haven't worked in those countries," said Green health spokesman Kevin Hague.

....It doesn't work but he (or at least his party) thinks it's a good idea...good grief!!!!!

[Wayne]

What leveling is required exactly when the big man at the IRD reports to parliament that IP has no tax advantages and even in some cases is treated more harshly than other forms of investment????

I think it was to level around all capital gains - not just property.
But it will have too many exemptions to make it worthwhile.
And I don't necessarily agree with it so aren't argueing it either way.

[eri]

But suppose you've got a bach, inherit a second home or buy an apartment in downtown Auckland to cut out the daily commute. Or suppose that spouses can claim to live apart. That opens up the prospect of "flipping".

The UK's politicians became notorious for this, with high profile scalps claimed following public outrage when the full picture leaked out.

Under UK law, the gain on the sale of a taxpayer's principle private residence qualifies for exemption from tax.

But politicians often have a constituency home, together with a taxpayer-funded London base.

What could be easier than "flipping" your principle private residence from one base to the next, claiming a tax exemption on each sale?

And there are other tricks too. When does a home office become a commercial building subject to tax, and when is it an exempt home?

What if its use changes over time?

Then there's the question of the family farm. The farmhouse itself is a home so exempt. But the surrounding land is a working farm, so - unless there's an exemption for that too - taxable.

Where do you draw the line? Exempting the farmhouse plus a little surrounding land is a common approach, with opportunities to split proceeds to minimise the taxable gain. Lifestyle blocks get tricky as well.

These issues are solvable, but complex. A generous relief will smooth the path for introducing the tax but at big financial cost. It's a tough trade-off to make.

http://www.stuff.co.nz/business/opinion-analysis/10428499/Capital-gains-tax-Exempting-the-family-home

[artemis]

Looks like if a CGT liable asset is inherited, the CGT liability travels with the asset and is triggered if the asset is sold. Sounds like death duty.