There is NO capital gains tax in New Zealand. There are certain situations when a gain (normally capital) is said to be income. For example if you are a trader, your income is what most other people will call capital gains BUT as your business is in buying and selling properties, the gain is your income. Subsitute in cars for a car dealer or cereal, jam, milk etc for a supermarket and it will make more sense - the houses become your stock in trade that you sell at a profit to create income.
Even if NZ had a capital gains regime, a trader might still come within the income test rather than the capital gains regime.
The problem with NZ is not this (it is fairly easy - you are trading or you are not) it is in the tainting. The tainting rules say that if you are a trader, builder developer you are always a trader, builder and developer so you cant be a long term buy and hold.
Donna - the perosnal home will always be safe you as your primary purpose is always to live in. the only time where it is dodgy is where you move every year after having majorly renovated. In which case it is not really a "home" but a renovation site that you are living at.
Other than the tainting, the main problem with NZ is enforcement. We have a self assessment system so it relies on the individual. This is where the Queenstown property speculators are getting caught as they deliberately miss applied the tax law (ignorance is no excuss).
Even if NZ had a capital gains regime, a trader might still come within the income test rather than the capital gains regime.
The problem with NZ is not this (it is fairly easy - you are trading or you are not) it is in the tainting. The tainting rules say that if you are a trader, builder developer you are always a trader, builder and developer so you cant be a long term buy and hold.
Donna - the perosnal home will always be safe you as your primary purpose is always to live in. the only time where it is dodgy is where you move every year after having majorly renovated. In which case it is not really a "home" but a renovation site that you are living at.
Other than the tainting, the main problem with NZ is enforcement. We have a self assessment system so it relies on the individual. This is where the Queenstown property speculators are getting caught as they deliberately miss applied the tax law (ignorance is no excuss).
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