BIG NEWS - Expected date for change to 5 year Brightline Test

[Wayne]

Hundreds of new build apartments on the way. Who will buy them? Those buying to rent might not be so keen under the current regime. First home buyers maybe, but might wait for more favourable conditions via Kiwibuild. Kiwibuild to onsell? Housing NZ or other social housing providers?

The penthouses will sell quickly I predict. Resale might be trickier depending on the mix of residents.

If purchases off the plan are too low developers might be in trouble.

I gather you are saying that a long term investor wouldn't buy them because they might have to sell within 5 years and would be caught by the brightline lest?
Doesn't seem so long term to me if they are only looking 5 years out.

[Wayne]

I suppose they'll just keep extending it too so 5 years will become 7 then 10. Our only glimmer of light might be if National get in next time and wind it back.

Really Donna this discredits you.
You have no basis for any assertion that a Labour Govt would increase it again - maybe National would (they started it after all, just the same as GST that they wouldn't raise but did).

[Wayne]

Is a PPOR still exempt?

To allow for people who have the jobs transferred.

Seems it is so average Joe is OK if he has to sell for any reason.

Also, what are the implications for executors of an estate that includes the family home / PPOR?

Not a lot really. Maybe the beneficiaries will get a little less than they would have otherwise but I couldn't see that that would break them.

The unfair part is
- gain in value on buisness sale - no tax and no timeframe
- gain in value on personal home sale - no tax
- gain in value on shares held long term - no tax

Shouldn't all things be treated the same?

Ross

I think the Tax Working Group is working on that sort of stuff - aren't they?

[Perry]

Also, what are the implications for executors of an estate that includes the family home / PPOR?

Not a lot really. Maybe the beneficiaries will get a little less than they would have otherwise but I couldn't see that that would break them.

Ahhhh, so a surrogate form of death duties, then?

[Wayne]

Is a PPOR still exempt?
To allow for people who have the jobs transferred.

Also, what are the implications for executors of an estate that includes the family home / PPOR?

Not a lot really. Maybe the beneficiaries will get a little less than they would have otherwise but I couldn't see that that would break them.

Ahhhh, so a surrogate form of death duties, then?

something like that

[Bluecoat]

Timeframe they will enact this after the bill has passed?

How was it done last time ?

[Viking]

Gone thru Parliament today.

A TAX ON HOUSE PRICE GAINS
Parliament has voted to extend the bright line test from two-years to five and it is now law. That means everyone will have to pay normal income tax on any price gain if the property was bought and resold within five years. The family home is exempt, but no other properties, like holiday homes are exempt and certainly not residential investment properties. As such, it is a capital gains tax in this circumstance. There is an expectation that this will change housing market activity.

https://www.interest.co.nz/news/92875/review-things-you-need-know-you-go-home-wednesday-coop-cuts-home-loan-rates-business

[pooky]

Sorry - simple questions here (just catching up).
Since traders already pay tax (33% + GST + ?)on trades, this doesn't affect them?
And does this apply to land/sections?

[Wayne]

Sorry - simple questions here (just catching up).
Since traders already pay tax (33% + GST + ?)on trades, this doesn't affect them?
And does this apply to land/sections?

It won't change anything for traders who already declare their trades.
It applies to residential land/ sections

[Perry]

Parliament has voted to extend the bright line test from two-years to five and it is now law.
As such, it is a capital gains tax in this circumstance.

If that was so, can you please show what the CGT rate is, as voted for, by parliament?

There is an expectation that this will change housing market activity.

That's the same as saying that tomorrow we expect weather activity.

What shape or form is the housing market activity change supposed to take?

Much like the proposed petrol tax hike, I suspect the reality is it's just another tax grab by Labour, confronting the cost of their election lolly scramble promises.

[donna]

And it's not retrospective aye - the CGT is on properties which were bought from the date of the extension.

cheers,

Donna

[Rosco]

The 5 years only affects new purchases from 29/3/18 onwards. So if you already own a rental, then no effect unless you restructure. If you were purchasing a rental, if the sale and purchase agreement was signed before 29/3, then still under 2 year rule too.

Ross

[murraythompson]

Agree with Rosco with the dates that it applies to property purchases. There is still an exemption for your main family home.

Also, you need to consider the intention of buying the property. If you brought the intention of selling it, then any gains are taxable income (even if you held it for longer than 5 years). So, for most people, the main reason of purchasing the property was for rental income (and the capital gains is an added bonus!).

If you are a property developer, then you may have 'tainting' issues where what you do on other properties can make capital gains on your rental property become taxable income.

Consult with an accountant before you buy or sell a rental property!


Murray
Rental Coach
rentalcoach.co.nz