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

[WGN ex-property manager]

Robin,

Too bad, if ring-fencing comes through, it will kill people.

Not me, my accountant has solutions prepared already.

They can only ring fence an entity, not an activity, so if I channel all income streams and business activities through one entity then I can offset profits agaisnt losses within the one entity. Problem solved.

Basically if your a wage or salary earner you're screwed, but if you own businesses you're not. Whch seems more like right wing policy to me

[TheLiberalLeft]

Does that mean placing property in the company name, Robin? That has its own risks, surely.

[WGN ex-property manager]

No, the property stays in it's current entity, which also provides consultancy services to the company

[WGN ex-property manager]

Much of the UK's petrol tax was a fixed cost per litre, not a % of pump price, so as the raw oil price rose, the tax became less and less of a % of pump price.

[klauster]

Robin, you are absolutely correct, we don’t have any issues with CGT, GST, and income taxed.



But people owning an investment property do, because their main income stream is salary. They don’t get even paid for their time and hard work cleaning up tenants mess. That is the majority of property investors, thought!

[flyernzl]

You have to remember what the GOALS for tax policy really are.

They are not:
1. To be fair
2. To promote growth
3. To be simple to operate
4. To remove distortions
5. To make housing more affordable


They are:
1. To collect revenue to feed the insatiable appetite of bureaucracy to create more bureaucracy
2. To collect revenue to be used at election time to bribe voters
3. To appeal to the populist trends in the parties core electorate so as to get as many votes as possible, thus get re-elected

4. To deter people from carrying out an activity that is considered undesirable, or to punish those who persist in indulging in that activity (eg smoking, owning a rental property investment).

[WGN ex-property manager]

Only if it doesn't interfere with getting re-elected.

[speights boy]

Capital gains tax attracting support - Poll

The first nationwide poll conducted since the Labour’s capital gains tax policy announcement finds 40.9% support Labour’s capital gains tax (CGT) proposal , 34.1% oppose, 17.9% are neutral and 7.1% don’t know.

http://www.nbr.co.nz/article/capital-gains-tax-attracting-support-poll-ne-97572

[drelly]

Too bad, if ring-fencing comes through, it will kill people.

We effectively have ring-fencing already for anyone not holding property in their own name or an LTC. Being able to write off expenses against your income is nice for now but that depreciation recovery when you want to transfer to a trust will hurt like hell. That's why I'm using a QC.

Robin, it sounds like your property company is billing your business to reduce taxable income. It might look ok on paper but justifying it in an audit could prove tricky!

[WGN ex-property manager]

Property company is not just a property company, its also a consultancy, and has been since before ring fencing ever became an issue. It's a commercial relationship with real hourly rate invoices for real work done.

[drelly]

I had an ingenious idea for transferring shares in my QC to my trust and then changing it to an LTC to be able to offset losses from the company to my business income within the trust (which also owns the business) but I don't think it will work as the dates for nominating an LTC and transferring to a trust don't match up. Maybe I should sell my web design business to my property company!

[motoman]

My apologies for the dumb question if its already answered in this long thread.

I dont understand the proposal for capital gains tax, is this additional to the tax you would pay on your income tax for making a profit from the sale of a property (which to me already seems like a sort of CGT)?

[cube]

Capital gains tax attracting support - Poll

The first nationwide poll conducted since the Labour’s capital gains tax policy announcement finds 40.9% support Labour’s capital gains tax (CGT) proposal , 34.1% oppose, 17.9% are neutral and 7.1% don’t know.

http://www.nbr.co.nz/article/capital...-poll-ne-97572

Spin it this way Majority do not support CGT

Seems like they had to sliced the numbers every which way to find a sector with majority support, and where was the figure for Investment Property Owners

[flyernzl]

My apologies for the dumb question if its already answered in this long thread.

I dont understand the proposal for capital gains tax, is this additional to the tax you would pay on your income tax for making a profit from the sale of a property (which to me already seems like a sort of CGT)?

From what I can deduce from the proposal, if you are a property trader you will pay income tax at the normal IRD rates on all your income including profits made from your property trading activities (less associated costs, of course).

If you are not a property trader and just happen to sell an asset at value greater than the purchase price, you will pay tax at the specified CGT rate on that increase in value (presumably without any allowance for costs involved).

[WGN ex-property manager]

And this is my problem with Labour's simplistic approach.

Homeowner buys a house for $300K, spends $100K adding an extension with an extra bedroom + ensuite + rumpus, house now worth $425K. Forced to sell due to change of circumstances. Get whacked for 15% of the full $125K increase in value, rather then 15% of the $25K net capital gain.