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  1. #1961
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    Jun 2004
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    10,404

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    Quote Originally Posted by elguapo View Post
    Depends on how much cash your putting in.
    Fair enough - but you know what I mean!
    Certainly, if you paid cash a 3% yield is better than money in the bank (though your risk is greater blah blah).

  2. #1962
    Join Date
    Jun 2013
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    2,116

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    Quote Originally Posted by Wayne View Post
    Fair enough - but you know what I mean!
    Certainly, if you paid cash a 3% yield is better than money in the bank (though your risk is greater blah blah).
    Sure.

    I think the IRD would have a case that anyone buying at a significant negative gearing is by definition in it for the capital gain. Not sure why they wouldn't given how vague 'intent' can be.

  3. #1963
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,032

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    If you are having to put in a swag of cash even just to get a nil or minimal return after costs, then it is still obvious that you are in there for the capital gain.

  4. #1964

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    As you may recall flyer; I posted this on your landlords thread 3 weeks ago.

    That's because the intention rule is a stupid rule.
    Regularly abused by the dishonest, or the greedy, or the stupid, or the naive.

  5. #1965
    Join Date
    Jun 2004
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    Quote Originally Posted by flyernzl View Post
    If you are having to put in a swag of cash even just to get a nil or minimal return after costs, then it is still obvious that you are in there for the capital gain.
    Not quite so black and white. Depends on the swag really.
    All my properties have been -ve geared at the start.
    But I can show that after a few years of moderate rental growth they become +ve.
    Think of Xero - still not making a profit but growing.
    Many companies do the same - loss in the first few years as they grow.

  6. #1966

    Default

    Some Apples and Oranges in there Wayne.

    GROWTH: yes, pouring earnings back into a business EG: Ryman.

    A residential property equivalent could be something like doing renovations, or building a sleepout.
    Of course it will then sell for a higher price.....GROWTH.

    That is different from buying, doing nothing, and then selling for a higher price.

  7. #1967
    Join Date
    Feb 2004
    Location
    Wellington
    Posts
    2,776

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    Quote Originally Posted by marklowes View Post
    To be safe what I'm going to do for each new purchase from now on is draft a short business case crunching the numbers and showing the cashflow and justification for purchase on grounds other than capital gain after re-sale (I do this anyway just normally don't record it); As I only buy good yielding property that does not rely on cap gains this is no problem for me. I will get it signed (witness/justice of peice/will need to look at what I need to give it the correct authority, any ideas?) and stick it in my property file in case it's ever needed (i.e if I end up selling later for any reason what so ever).

    Absolutely not an issue for most real property investors on here I'd imagine
    Only urban myth ....but I've been told that this could be counter-productive..... the premise being that going to such lengths to prove your intent actually raises a red flag

    IMHO......No matter what paper work is signed nobody can prove intent.

    I believe when it comes down to it IRD know they can't prove intent one way or the other so they move on to looking for a pattern. ...ie: once you can pretty much get away with anything, but once you get to 11-12 like that case recently you're pretty much stuffed no matter what kind of reasons/intentions you can come up with

    Cheers
    Spaceman
    Delightfully in need of some Tender Loving Care
    Blessed are those who can give without remembering and take without forgetting
    Some things are not as they seem, nor are they otherwise

  8. #1968

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    Quote Originally Posted by spaceman View Post
    I believe when it comes down to it IRD know they can't prove intent one way or the other .......
    They don't need to; the taxpayer does.

  9. #1969
    Join Date
    Mar 2014
    Posts
    362

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    Quote Originally Posted by spaceman View Post
    Only urban myth ....but I've been told that this could be counter-productive..... the premise being that going to such lengths to prove your intent actually raises a red flag

    IMHO......No matter what paper work is signed nobody can prove intent.

    I believe when it comes down to it IRD know they can't prove intent one way or the other so they move on to looking for a pattern. ...ie: once you can pretty much get away with anything, but once you get to 11-12 like that case recently you're pretty much stuffed no matter what kind of reasons/intentions you can come up with

    Cheers
    Spaceman

    I would say that 'proof' means balance of probabilities (not without doubt), and from what I've heard the IRD can suspect and ask you to show evidence, at this point the onus is on you to provide evidence that on the balance of probabilities your intention in buying the property was not so you could then sell it at a profit. So in effect, by the time they come knocking, they dont have to prove anything. It's you that has to show the proof.

    I think if I showed evidence showing cash flow from day one, with a business case based on cash flow, prehaps comparing it to the bank interest rates at the time, and a statement indicating the intention for buying was to benefit from the cash flow premium over bank interest rate, then they couldnt touch me.

  10. #1970
    Join Date
    Mar 2014
    Posts
    362

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    "The civil standard of proof is widely understood to require facts to be proved on the balance of probabilities, or shown as more probable than not. In crude mathematical terms, this might be described as meaning that the party whose case reaches a probability threshold of at least 51 per cent will meet the required standard of proof."

    Source: D Hamer “The Civil Standard of Proof Uncertainty: Probability, Belief and Justice” (1994) 16 Syd LR 506 at 509.


 

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