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

[Don't believe the Hype]

No CGT on PPOR creates a case for PIMP MY HOME - this exemption in Australia has led to huge upgrades in homes leading to expectations of what an everyday home should be. This is not the same in NZ (yet).

in aus people move into a do up, renovate while living in it for the min prescribed time then sell fully pimped out with an untaxed gain... repeat.... repeat... repeat.

[Don't believe the Hype]

Personally I like this tax on capital - it causes an immediate need for cash flow on any asset which can only come from rent increases. I see this as another opportunity to increase rents

[Perry]

Inflation, a small amount of, seems to be something seen as desirable - and the lack of inflation being a bad thing.

When subject to a tax, even a small amount of inflation is bad.

[Perry]

I really seems to me that Cullen and the TWG have their head screwed on - unlike what many people expected. He is 100% correct in saying that nothing in Taxation is 100% certain - nothing in tax being a 'no brainer'.

Personally I see CGT as being more ideology driven to 'balance' the tax system (much like GST was).
It's about broadening the tax base as they say.

Of course, if it doesn't apply to everything (PPOR included) then it gets messy. Like our GST works well because it applies to everything.

There's lots of problems, even if Comrade Commissar Cullen does seem to be being pragmatic. (And upsetting the ideologues in the process).

I didn't know whether to laugh or cry when I read that Comrades Robertson and Nash had to write to the TWG telling them that (the interim report) was not the result they wanted.*

If ever we needed confirmation about the general farce called "government consultation" and "independent inquiry group," we sure have it now.

You mention GST works well because it applies to everything. I do hope you're not charging GST to your residential tenants, Wayne.

Balance is a weasel word. Like fair or beautiful. It's all in the perception of the utterer. What's fair and balanced to the reds and greens is quite the opposite to those who favour free enterprise.

Of course, there's no discussion about the gummint's rapacious thirst for more and more tax revenue and how reducing that could change things. Much better to tilt at windmills (chase symptoms) than it is to rationally appraise causes and deal with them.

As I see it, the effects of excess immigration are coming home to roost and gummints - all of them - are looking for scapegoats, rather than accepting the blame for their own actions.

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EDIT

I found the reference I was searching for:


* I do realise that such a gathering of practical people who have daily experience of working and living within the property market may possibly return a report that does not agree with any preset Government agenda. This is always a risk. Some years ago a large Canadian city hired a consultant to prepare a report on how to reduce fuel use and the subsequent pollution within the city. They were shocked and horrified when the report eventually arrived recommending that the best way to reduce pollution was for the city to provide more easily accessible parking for vehicles. After driving to their destination people could then immediately find a parking spot rather than be left driving around and around the place searching for somewhere to leave their car, unnecessarily burning fuel and causing road congestion in the process. This was, of course, diametrically opposed to the city bureaucrats pre-prepared plan to restrict and heavily tax vehicle access. Embarrassingly, they had totally forgotten to tell the consultant what his conclusions were to be.

[Perry]

Personally I like this tax on capital - it causes an immediate need for cash flow on any asset which can only come from rent increases. I see this as another opportunity to increase rents

What?

How do you increase rents beyond tenants' ability to pay?

[Perry]

No CGT on PPOR creates a case for PIMP MY HOME - this exemption in Australia has led to huge upgrades in homes leading to expectations of what an everyday home should be.

As I see it, that very 'distortion' is one that Comrade Commissar Cullen & Co are grappling with.

[Don't believe the Hype]

As I see it, that very 'distortion' is one that Comrade Commissar Cullen & Co are grappling with.

Right - but the beauty is that can’t stop you from getting someone else to pay the bill

[Perry]

Beauty?

Only if they can afford it.

The socialists have a rose-tinted-spectacles view of the world.

Once the reality of the socialists dewy-eyed, save-the-tenants legislative measures bite those very same tenants in the bum . . .

. . . the socialists will introduce rent controls, given half a chance.

[Don't believe the Hype]

What?

How do you increase rents beyond tenants' ability to pay?

If the bill goes beyond the ability of the current tenant to pay I list it on TM at my property required price, the new tenant is selected.

As costs rise everyone gets an increase then over time they reduce their expectations on what they rent for the same money.

We’ve been doing just this with the insulation, heating and other improvement forced upon us. 3br unite last year rented for $260/wk now they’re nearly $400/wk - same tenants? In some cases yes but the majority have moved on into a smaller place or moved further out of town.

The new tenants who used to live closer to town are having no problem paying the increased rent

[flyernzl]

"I found the reference I was searching for:"

Nice to myself being quoted!

[Bob Kane]

How do you increase rents beyond tenants' ability to pay?

Simply exchange that tenant for one that can afford to pay the increased rent.
There is always a tenant who has the ability to pay.
This is not widely understood.

[Perry]

Well, Dhil Twitford will doubtless amend his amendment to the RTA to the effect that increasing the rent beyond a tenant's ability to pay will not be a reasonably acceptable or legitimate reason for ending a tenancy.

[Perry]

The Oracle Strikes Again

A few valid points, but perhaps not to read on a full stomach.

Dear young renters: you are sooo toast
Bernard Hickey
21 Sep 2019

[artemis]

Simply exchange that tenant for one that can afford to pay the increased rent.
There is always a tenant who has the ability to pay. This is not widely understood.

Yes, but it does depend on supply and demand. Well located rentals will do well if there is a shortage. Rentals in the Hokianga or Bunnythorpe less likely to achieve a serious rent increase but face similar costs. But perhaps more likely to be converted to non residential as compliance and other costs increase.

Will there be a shortage of rentals? Still to play out overall but for sure in some locations. Will property investors be buying up some of the large number of new builds apparently on the way? Seems to me they are less likely to do so if they are negatively geared and capital gains prospects are diminished. Are there enough owner occupier buyers to take up the slack?

I think we are likely to see more Ebert situations.

[flyernzl]

Hickey one again seems to base his argument on just two assumptions:
- that putiing a tax on something will reduce its price (when has that ever happened?)
- that there are many, many 'productive enterprises' already out there just languishing through the unavailability of finance (where are they, can anyone spot them?)