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

[flyernzl]

Unlike how the Left portrays them, most residential landlords are not wealthy executives and business owners. You will not find Simon Moutter or Mark Ford answering phone calls from their tenants abouut leaky toilets at 9pm on a Saturday night. They are too busy making heaps of money at their day jobs.

From my own observations, most Landlords and residential do-up traders work during the day at what would be regarded politically as routine minor functionary and possibly dead-end jobs, and regard their property activities as the only available way out of their current financial constraints and a chance to amass a nest-egg for their retirement years.

In other words these people, who the Left wish to penalise, would be generally regarded as traditional Labour Party voters.

This use to happen years ago - Labour would trumpet on about 'taxing the rich' when they next got back into power. Watersiders, railway tradesmen, school teachers and suchlike would therefore vote them back in only to find, to their horror, that they were the ones Labour hit with increased taxes.

[Eugene]

Unlike how the Left portrays them, most residential landlords are not wealthy executives and business owners. You will not find Simon Moutter or Mark Ford answering phone calls from their tenants abouut leaky toilets at 9pm on a Saturday night. They are too busy making heaps of money at their day jobs.

From my own observations, most Landlords and residential do-up traders work during the day at what would be regarded politically as routine minor functionary and possibly dead-end jobs, and regard their property activities as the only available way out of their current financial constraints and a chance to amass a nest-egg for their retirement years.

In other words these people, who the Left wish to penalise, would be generally regarded as traditional Labour Party voters.

This use to happen years ago - Labour would trumpet on about 'taxing the rich' when they next got back into power. Watersiders, railway tradesmen, school teachers and suchlike would therefore vote them back in only to find, to their horror, that they were the ones Labour hit with increased taxes.

Very true I think, thanks for the interesting comment

[Perry]

Very, very well put, Flyernzl! Only goes to show how
thick-as-two-short-planks all-too-many voters are.

[flyernzl]

I suspect that the CGT is not yet put to bed.

Several of the prominent members of the financial investment community appear to be still promoting this idea with JK. They obviously see an opportunity to shift the public's investment horizions from property (in which they do not get ongoing commissions) to the financial markets (where they do get a rake-off).

Similar idea to them trying to make Kiwisaver compulsory for all - nice fat fees for them.

[Bluekiwi]

I suspect that the CGT is not yet put to bed.

Several of the prominent members of the financial investment community appear to be still promoting this idea with JK. They obviously see an opportunity to shift the public's investment horizions from property (in which they do not get ongoing commissions) to the financial markets (where they do get a rake-off).

Similar idea to them trying to make Kiwisaver compulsory for all - nice fat fees for them.

Looked like CGT was going to be excellent for property trading.

Taking your tax from 33% to 15% looks brilliant

[Wayne]

Looked like CGT was going to be excellent for property trading.

Taking your tax from 33% to 15% looks brilliant

I don't think it changed anything for trading - still stock!

[artemis]

I suspect that the CGT is not yet put to bed. Several of the prominent members of the financial investment community appear to be still promoting this idea with JK. They obviously see an opportunity to shift the public's investment horizions from property (in which they do not get ongoing commissions) to the financial markets (where they do get a rake-off). Similar idea to them trying to make Kiwisaver compulsory for all - nice fat fees for them.

Doubt it will be Nat policy. They have seen the impact gradually dawn on large numbers of ordinary folk.

[speights boy]

Broader capital gains taxation is coming

Secondly, and stemming from this greater audit focus, expect the IRD to start considering in detail a person’s rationale for investing.

For example, could the purchase of a low-yielding and heavily leveraged rental property be interpreted as meaning the property was acquired with a purpose or intent of re-sale?
Does the investment make sense without a capital gain?

Lest this sounds fanciful, the general view amongst tax advisors is that gains arising from the sale of gold or other precious metals are almost certainly taxable.
This is on the basis that only by sale can any investment return be realised. Accordingly, the intention to sell must have existed at the time of purchase.

As part of the same trend the IRD will issue public “clarifications” or reinterpretation of existing rules.
These clarifications will just happen to have the effect of increasing the incidence of taxation.

[Wayne]

I have always wondered how we can say we purchased a 5% return, with full mortgage, and claim it was purely investment.
That could take the shine off things a bit.
Also plays well with those who have said that we don't need a CGT - just apply the existing rules properly.

[artemis]

I have always wondered how we can say we purchased a 5% return, with full mortgage, and claim it was purely investment. That could take the shine of things a bit. .......

Maybe because receiving net income from an investment can depend on the passage of time. After 10 years, say, principal pay down and rent rises usually lead to net income, other things being equal. Not everyone has a short time horizon.

I would like to see a bright line test from IRD, as the intention test is on the vague side, especially as I believe there is no time limit on it. Perhaps something like a reducing CGT after 5 years and/or none after 10 years.

[Curious]

Don't need to sell in order to make use of negatively geared property - instead refinance to access the equity and buy a positively geared house that'll pay for both. I for one have no intent to sell any of my holds.

[Perry]

Have Cake: Will Eat Too?

Some things don't stand alone.
E.g.
We will have weather tomorrow.

Is time a determinant in buying and selling gold? How
would Silas Marner have fared? Would being a hoarder
disqualify one from being 'in business.'

Can a PI be determined as non-commercially sensible
in the absence of a timeline being applied? (As Artemis
has observed)

Will the "clarifications" and "re-interpretations" apply
equally to residential and commercial properties?

How would the IRD respond to a taxpayer saying that
s/he was clarifying or re-interpreting their position in
making structural changes?

Sauce for the goose . . . etc.

[Bluekiwi]

I have always wondered how we can say we purchased a 5% return, with full mortgage, and claim it was purely investment.
That could take the shine off things a bit.
Also plays well with those who have said that we don't need a CGT - just apply the existing rules properly.

If you are taking a longer term approach, say 30 years, and there is inflation - say 5% as an example.
Of course you can say that.

The mortgage stays the same.
But both the house value and the Rent increases.
But taking your thinking and ignorning the house value increase, which if you never sell, is irelevant.

500k house now with 500k debt.
In 20 years time on interest only, is still going to only be 500k.

The Rent of $500 per week inflating at 5% or even 3% is going to do the job nicely for you.
You just got to survive long enough to enjoy it

[Bluekiwi]

Hey I just love the new word "Ignorning" I have invented

[Wayne]

The interesting thing about making losses in property is that, generally people think it is bad.
As you say, it is a matter of timing.
People seem happy that Xero hasn't made a profit, and don't expect to make one for a while yet, as they plough money into chasing growth.

Of course, one difference is that the Xero losses are locked in the company rather than distributed to the shareholders.