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This can only be a good move, better than bleating on about a CGT.
I wonder if IRD troll this website and make note of the names/pseudonyms of investors who blatantly reveal "they will sell half of their properties in 10 years time to make themselves mortgage free on the other half and live off the income". Surely this sort of 'intention' that is publicly written in a blog could be tracked down by big brother to find out who the authors are ??
I wonder if IRD troll this website and make note of the names/pseudonyms of investors who blatantly reveal "they will sell half of their properties in 10 years time to make themselves mortgage free on the other half and live off the income". Surely this sort of 'intention' that is publicly written in a blog could be tracked down by big brother to find out who the authors are ??
I have a mate who is an investigator for the IRD and I'd say that such pronouncements wouldn't bother them in the slightest .....from what he's told me.
There's much easier ways to catch the guys they're after......................that being said a couple of other posters have said in the past that they "know" the IRD keeps track of this site though what facts they had rather than just urban myth IDK...........pretty easy to do without anything nearly as exotic as the GCSB.
Willing to bet that the "news item" is really a paid for ad by the IRD
I wonder if IRD troll this website and make note of the names/pseudonyms of investors who blatantly reveal "they will sell half of their properties in 10 years time to make themselves mortgage free on the other half and live off the income". Surely this sort of 'intention' that is publicly written in a blog could be tracked down by big brother to find out who the authors are ??
They will be paying tax on their mortgage free properties tho as its still a profit? The captial is being reinvested into the business so whats the issue?
The issue is that their intent all along was to sell, therefore they are subject to tax on those sales.
Yes current rules are all about intent.
And I would expect you would need to prove your intent, before purchase.
And have a good reason to sell.
If you have no proof either way, on both sides, then I would think the IRD are free to draw their own conclusions.
If you never lived in it, or rented it for 2 days, or told everyone on property talk you bought this house, and were going to sell it and make heaps of money.
Then you will and should be caught and should pay your tax.
Someone told me - cant remember -, that one of their accountants was doing a visit at IRD, and walking past office, saw property talk being looked at.
And I think another accountant said something. Who knows.
But IRD have extra funds to catch this sort of thing.
And obviously if you are doing a few of them you will be caught.
But its amazing how many people do the odd one of these "Intentionally", under there own names, now and then, and just dont pay tax.
As they dont feel like, and really just have no idea how the system works.
Most people I have talked to, believe if you do only 1 or 2 a year you dont have to pay tax, and if you do more than 3 then you do, I have no idea where that came from.
100% of people I have talked to, non-investors, think this, and have no idea on the rules.
So maybe better education is important.
The sneaky ones, who know what they are doing, would put the properties under different personal names, company's and stuff.
All power to the IRD for catching this lot.
And remember, properties investors do pay "Capital Gains Tax".
I wonder if IRD troll this website and make note of the names/pseudonyms of investors who blatantly reveal "they will sell half of their properties in 10 years time to make themselves mortgage free on the other half and live off the income". Surely this sort of 'intention' that is publicly written in a blog could be tracked down by big brother to find out who the authors are ??
Fair point.
But you could argue that was not the intention, prior to purchase.
Or for that specific purchase.
My properties are in a rental trust for my children, and my intention is to hold for at least 10 to 20 years.
If rents rise, and values, and the mortgages are not that great, so cash flow starts coming right, then there may be no need to downsize.
But its certainly an exit option, for the rental business, as you get older, maybe retirement ?
Or sell the rentals and buy higher yielding easier to manage commercial property (no tenants hassles).
Plus I would hazzard a guess that investors who hold on to a property for 10 years plus are not really what the IRD are after.
I am pretty sure they are after people who buy, renovate, and sell maybe 1 to 3 properties per year, dont live in them, and dont pay tax.
I would say that is their target market.
I am pretty sure they are after people who buy, renovate, and sell maybe 1 to 3 properties per year, dont live in them, and dont pay tax.
I would say that is their target market.
1-3 a year, live in or not I think. Serial renovators are in their targets also.
People seem to think that if they live in them for a while (you define 'a while') they will be OK as it is their PPOR - wrong!
1-3 a year, live in or not I think. Serial renovators are in their targets also.
People seem to think that if they live in them for a while (you define 'a while') they will be OK as it is their PPOR - wrong!
"Serial Renovators" - I quite like that.
A young man's game. Should have done it when I was a lad, not anything you would want to put your family through.
But I wonder how they define that, even moving every 2 years, is that going to be taxable ??
Gets a bit tricky doesnt it.
A couple of years ago real estate offices were reporting they had been asked for sales records by IRD. That would be a fairly simple way to track possible lines of enquiry.
A couple of years ago real estate offices were reporting they had been asked for sales records by IRD. That would be a fairly simple way to track possible lines of enquiry.
Companies and Trusts they could trace back the people behind the purchases and sales.
But what about the names people use on S&P's, when you have your mother brother sister and children to pick from, plus middle and second names.
I wonder what the rules are on what name you use on the S&P, could you actually make up a name ???
I have never had my ID checked by real estate agents when I buy a property.
Only check is going to be your solicitor I guess.
It is also important to bear in mind that the onus of proof most people are familiar with - innocent until proven guilty - is reversed when it comes to tax disputes.
So although you may be able to put hand on heart and say you are not a trader, if you are in a pattern of buying and selling properties over a period of time it is within IRD's powers to simply give you a huge tax bill on the basis they think you are a trader. You are then faced with having to pay tens or hundreds of thousands of dollars to go through the statutory disputes process (which can often be more costly than the tax bill itself) to prove you were not. A daunting task given the current attitude of the judiciary towards taxpayers.
Moral of the above? It's not a good idea to sail too close to the wind.
It is, as you say, a matter of intent, and that intent may be quite obvious.
Someone who buys a residential property (with mortgage), rents it out, and at a later time sells that property at a higher price and who has sustains a cash flow loss for the entire time that they owned it obviously carried out the whole transaction as a capital gains exercise.
If I were the IRD I would say that, in the absence of any other compelling reason, that this type of buy-rent-sell transaction is taxable.
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