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@JC said in NZ Politics:
and they are just recycling it into an inflated market.
Yep, and if you want to own another house that is where the "profit" goes. It is never actually realised in terms of income or cash. You never see it - it is just absorbed into another asset because you need somewhere to live. So you can rent off an investor who is paying tax, or reinvest the capital and it is capital, not profit, so shouldn't be subject to tax. I like @JC saying that it is inflation, because that is in effect what it is. Things generally go up in price over time. Simple as that.
Housing fluctuates too. So do you get a refund on CGT housing if you sell at a loss? Bought a $1m place spent $200k on it and sell for $800k? What happens there?
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@Snowy said in NZ Politics:
@JC said in NZ Politics:
and they are just recycling it into an inflated market.
Yep, and if you want to own another house that is where the "profit" goes. It is never actually realised in terms of income or cash. You never see it - it is just absorbed into another asset because you need somewhere to live. So you can rent off an investor who is paying tax, or reinvest the capital and it is capital, not profit, so shouldn't be subject to tax. I like @JC saying that it is inflation, because that is in effect what it is. Things generally go up in price over time. Simple as that.
Housing fluctuates too. So do you get a refund on CGT housing if you sell at a loss? Bought a $1m place spent $200k on it and sell for $800k? What happens there?
Yes, of course you do get tax credit in that situation, that's exactly what happens in capital gains tax.
It's inflated sure, but it's a far cry from what most would consider inflation. It is out of all proportion to the increases in wages or anything else - that is the whole problem, and the reason why something needs to be done to fix it. -
@JC
You don't tax on theoretical value, but you do calculate equity on that basis. The former is the opinion of just about everybody bar some of the Greens, the latter is fact rather than opinion.
As for ascribing me the position of having a problem with someone having money, that's just crap. It's not spiteful to tax all of someone's income, it's just wanting it to be fair. Why should someone who starts out more wealthy have access to a more advantageous tax system? That's crazy. It's the very epitome of the rich getting richer.
In my example, person A does not necessarily even have to pay any principal (until the sale) on the house, but they still get richer and don't get taxed on that part of their income, whereas person B is taxed on all of theirs over the same period. It is not fair that some of someone's income should be tax-free simply because they were able to afford a house. And as I said previously, it is quite possible for a government to increase its tax take on CGT and reduce their tax take elsewhere - so it is not true to say that fixing the tax system doesn't help person B - it absolutely should.
I get that you are, as a property owner, opposed to capital gains tax and you think that the government would just take the extra money, increase the total tax taken, and waste it. Maybe they would, I certainly don't have a lot of faith in their decision-making, which has made the housing situation worse. But I am talking about what makes sense from a taxation perspective, what is fair and does not disadvantage the poor, and can help to address the ridiculous situation that NZ finds itself in re housing. CGT is common worldwide, it makes sense and increasing that tax take could provide lower income tax elsewhere for example, which would stimulate the right areas of the economy. -
Further to the inflation argument - it's quite possible to deduct inflation from a capital gain, not that I think you should. Essentially that would be special treatment unless you are doing the same for anyone's savings in the bank etc etc, and special advantages for buying and selling property in nz is exactly the opposite of what we need.
Tax can be a lever to change things in a desired direction. If you were to implement proper CGT, then provide exceptions / tax breaks for anyone building new for example, you would have a decent incentive to create new housing supply, take heat out of the existing housing market, and improve the quality of housing in nz. Do that and address the cost of building materials and it would be a major positive step for the country as a whole. -
@reprobate said in NZ Politics:
Do that and address the cost of building materials and it would be a major positive step for the country as a whole.
Australia has a CGT and massive house price headaches. CGT are important, but I don't think a major contributor to prices. Fundamentally, buyers want to pay as little and possible, and it's the supply/demand imbalance that causes this.
Secondly, the building materials/cost of building is what attracts all the attention, but frankly isn't a huge contributor to the cost of housing. It's all about the land, and having land with services that can be built on. That's where the expense and barrier lies. Seriously, check these guys out: https://www.builtsmart.co.nz/ based in Huntly, and building around $2k/m2. And yet a 2 bed unit in Auckland (Ellerslie) goes for nearly 800k ... why is that? It's the constriction of supply for a few decades with the RMA, and the stimulation of demand with inflow into Auckland.
The housing market in Auckland in particular, and NZ in general is a national disgrace. We have not had anyone taking it seriously, and this Government just found out how hard it is to actually densify or build at any scale. If you aren't doing greenfields, you're rebuilding infrastructure in a massive (and costly way) to enable house building to take place. And, if you don't do the infrastructure, you literally can't build any additional housing at all.
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@reprobate said in NZ Politics:
@JC
You don't tax on theoretical value, but you do calculate equity on that basis. The former is the opinion of just about everybody bar some of the Greens, the latter is fact rather than opinion.
As for ascribing me the position of having a problem with someone having money, that's just crap. It's not spiteful to tax all of someone's income, it's just wanting it to be fair. Why should someone who starts out more wealthy have access to a more advantageous tax system? That's crazy. It's the very epitome of the rich getting richer.
In my example, person A does not necessarily even have to pay any principal (until the sale) on the house, but they still get richer and don't get taxed on that part of their income, whereas person B is taxed on all of theirs over the same period. It is not fair that some of someone's income should be tax-free simply because they were able to afford a house. And as I said previously, it is quite possible for a government to increase its tax take on CGT and reduce their tax take elsewhere - so it is not true to say that fixing the tax system doesn't help person B - it absolutely should.
I get that you are, as a property owner, opposed to capital gains tax and you think that the government would just take the extra money, increase the total tax taken, and waste it. Maybe they would, I certainly don't have a lot of faith in their decision-making, which has made the housing situation worse. But I am talking about what makes sense from a taxation perspective, what is fair and does not disadvantage the poor, and can help to address the ridiculous situation that NZ finds itself in re housing. CGT is common worldwide, it makes sense and increasing that tax take could provide lower income tax elsewhere for example, which would stimulate the right areas of the economy.Well clearly you know a lot more about this than me. That economics degree and the 30 years in banking were clearly wasted.
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@JC said in NZ Politics:
@reprobate said in NZ Politics:
@JC
You don't tax on theoretical value, but you do calculate equity on that basis. The former is the opinion of just about everybody bar some of the Greens, the latter is fact rather than opinion.
As for ascribing me the position of having a problem with someone having money, that's just crap. It's not spiteful to tax all of someone's income, it's just wanting it to be fair. Why should someone who starts out more wealthy have access to a more advantageous tax system? That's crazy. It's the very epitome of the rich getting richer.
In my example, person A does not necessarily even have to pay any principal (until the sale) on the house, but they still get richer and don't get taxed on that part of their income, whereas person B is taxed on all of theirs over the same period. It is not fair that some of someone's income should be tax-free simply because they were able to afford a house. And as I said previously, it is quite possible for a government to increase its tax take on CGT and reduce their tax take elsewhere - so it is not true to say that fixing the tax system doesn't help person B - it absolutely should.
I get that you are, as a property owner, opposed to capital gains tax and you think that the government would just take the extra money, increase the total tax taken, and waste it. Maybe they would, I certainly don't have a lot of faith in their decision-making, which has made the housing situation worse. But I am talking about what makes sense from a taxation perspective, what is fair and does not disadvantage the poor, and can help to address the ridiculous situation that NZ finds itself in re housing. CGT is common worldwide, it makes sense and increasing that tax take could provide lower income tax elsewhere for example, which would stimulate the right areas of the economy.Well clearly you know a lot more about this than me. That economics degree and the 30 years in banking were clearly wasted.
Yeah, well, it was a nice place to eat your lunch, all the same
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@reprobate said in NZ Politics:
Yes, of course you do get tax credit in that situation, that's exactly what happens in capital gains tax.
Whose CGT? The fictional one that we don't have?
Whose model are you using to come up with these assumptions?
Aus also have a 12 month rule would we have that?What about stamp duty so that you effectively pay tax when you buy a property. Should we have that too, and make it even harder for young people to get on the ladder?
Aside from the economics there is also the psychological side of owning your own home and raising a family there. Doing improvements, etc, on something that you own. It is ingrained in a lot of Kiwi's and making it less attractive as an option, is political suicide. Labour realised that and bailed out.
Most homeowners in NZ start with a fairly modest house, do it up a bit, build some equity and move on to something bigger/ better. You remove, say 1/3rd of that equity in tax, they can't move. That 7.4 years that most people own for becomes over 10 years. Maybe the extra child can't be afforded. It has a large affect on quality of life. It is the family home not an investment for profit. That has always been a distinction here.
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@voodoo said in NZ Politics:
Just to be clear, Australia does not have CGT on the family home, just investment properties.
... and I recall the proposed CGT from 2017 in NZ would exempt the family home as well. They almost alwyas do, as it's political suicide to have tax on the family home.
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
Also @reprobate the allowance for inflation is non-trivial, and the challenge of 'fair pricing' for assets is really hard too. How much fo a discount can you sell it for to family members? What happens if it is owned by a trust or company? From what I see, it rapidly becomes a massive complex nightmare that often doesn't raise as much money as folk want.
In the UK they had stamp duty on house sales - kind of a CGT in another name. Low rated, but applied to every property transaction.Just looked it up (https://www.gov.uk/stamp-duty-land-tax/residential-property-rates#:~:text=You usually pay Stamp Duty,when you bought the property) - free up to GBP500k, then 5-12% above that!
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@voodoo said in NZ Politics:
Just to be clear, Australia does not have CGT on the family home, just investment properties.
Sorry, I wasn't very clear there when I mentioned Aus.
We have already have covered the NZ tax regime and investment properties are taxed, like Aus. We just don't call it CGT. It is investment profit and taxable.The family home is exempt for good reasons.
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@nzzp said in NZ Politics:
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
That is still taxable in NZ. "Intent". Wording of our tax laws are quite clever. You can't have two family homes. My accountant would never let me get away with that sort of thing. There is tax avoidance and tax evasion. One is legal one is not. Brightline also clarifies things.
Aus actually have a 6 month restriction where you can own 2 homes -whilst you "move" after that, which ever one gets sold is taxable, the other is your family home.
The rules are already there on both sides of the ditch and people who try to flout them end up like Al Capone.
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@Snowy said in NZ Politics:
@nzzp said in NZ Politics:
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
That is still taxable in NZ. "Intent". Wording of our tax laws are quite clever. You can't have two family homes. My accountant would never let me get away with that sort of thing. There is tax avoidance and tax evasion. One is legal one is not. Brightline also clarifies things.
Aus actually have a 6 month restriction where you can own 2 homes -whilst you "move" after that, which ever one gets sold is taxable, the other is your family home.
The rules are already there on both sides of the ditch and people who try to flout them end up like Al Capone.
Shit don't tell the ATO. We had an overlap of 9 months...
... mind you they probably owe us money given the inflation/expenditure/"increased" value argument...
Bought at the top of the market and sold in the doldrums ...
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@booboo said in NZ Politics:
inflation/expenditure/"increased" value argument...
That is why some of us don't like CGT. It's complex even for rentals, but family homes become even more messy. The winners are accountants not homeowners.
@booboo said in NZ Politics:
Shit don't tell the ATO. We had an overlap of 9 months...
They are renowned for their compassion and understanding. Should be fine...
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@Hooroo said in NZ Politics:
@JC said in NZ Politics:
@reprobate said in NZ Politics:
@JC
You don't tax on theoretical value, but you do calculate equity on that basis. The former is the opinion of just about everybody bar some of the Greens, the latter is fact rather than opinion.
As for ascribing me the position of having a problem with someone having money, that's just crap. It's not spiteful to tax all of someone's income, it's just wanting it to be fair. Why should someone who starts out more wealthy have access to a more advantageous tax system? That's crazy. It's the very epitome of the rich getting richer.
In my example, person A does not necessarily even have to pay any principal (until the sale) on the house, but they still get richer and don't get taxed on that part of their income, whereas person B is taxed on all of theirs over the same period. It is not fair that some of someone's income should be tax-free simply because they were able to afford a house. And as I said previously, it is quite possible for a government to increase its tax take on CGT and reduce their tax take elsewhere - so it is not true to say that fixing the tax system doesn't help person B - it absolutely should.
I get that you are, as a property owner, opposed to capital gains tax and you think that the government would just take the extra money, increase the total tax taken, and waste it. Maybe they would, I certainly don't have a lot of faith in their decision-making, which has made the housing situation worse. But I am talking about what makes sense from a taxation perspective, what is fair and does not disadvantage the poor, and can help to address the ridiculous situation that NZ finds itself in re housing. CGT is common worldwide, it makes sense and increasing that tax take could provide lower income tax elsewhere for example, which would stimulate the right areas of the economy.Well clearly you know a lot more about this than me. That economics degree and the 30 years in banking were clearly wasted.
Yeah, well, it was a nice place to
eatdrink your lunch, all the sameNow it's true
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@JC said in NZ Politics:
@Hooroo said in NZ Politics:
@JC said in NZ Politics:
@reprobate said in NZ Politics:
@JC
You don't tax on theoretical value, but you do calculate equity on that basis. The former is the opinion of just about everybody bar some of the Greens, the latter is fact rather than opinion.
As for ascribing me the position of having a problem with someone having money, that's just crap. It's not spiteful to tax all of someone's income, it's just wanting it to be fair. Why should someone who starts out more wealthy have access to a more advantageous tax system? That's crazy. It's the very epitome of the rich getting richer.
In my example, person A does not necessarily even have to pay any principal (until the sale) on the house, but they still get richer and don't get taxed on that part of their income, whereas person B is taxed on all of theirs over the same period. It is not fair that some of someone's income should be tax-free simply because they were able to afford a house. And as I said previously, it is quite possible for a government to increase its tax take on CGT and reduce their tax take elsewhere - so it is not true to say that fixing the tax system doesn't help person B - it absolutely should.
I get that you are, as a property owner, opposed to capital gains tax and you think that the government would just take the extra money, increase the total tax taken, and waste it. Maybe they would, I certainly don't have a lot of faith in their decision-making, which has made the housing situation worse. But I am talking about what makes sense from a taxation perspective, what is fair and does not disadvantage the poor, and can help to address the ridiculous situation that NZ finds itself in re housing. CGT is common worldwide, it makes sense and increasing that tax take could provide lower income tax elsewhere for example, which would stimulate the right areas of the economy.Well clearly you know a lot more about this than me. That economics degree and the 30 years in banking were clearly wasted.
Yeah, well, it was a nice place to
eatdrink your lunch, all the sameNow it's true
I had a beer a week ago when watching one of our horses race at lunch time and felt guilty! What has happened to workplaces where you can't poke off for lunch and enjoy a beer or two!?!
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@Snowy said in NZ Politics:
@nzzp said in NZ Politics:
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
That is still taxable in NZ. "Intent". Wording of our tax laws are quite clever. You can't have two family homes. My accountant would never let me get away with that sort of thing. There is tax avoidance and tax evasion. One is legal one is not. Brightline also clarifies things.
You can't have two family homes but you can sell one place, move into the other then sell it a little later. As you haven't purchased the second home within the brightline period there is nothing payable. Also it becomes your new family home as long as you spend 50% of time there.
Do it right and you can then invest in another property, sell the holiday home (no tax) and move there. Intent was to live at the beach, you decided you didn't like it so moved back to town in your investment apartment. -
@Crucial said in NZ Politics:
@Snowy said in NZ Politics:
@nzzp said in NZ Politics:
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
That is still taxable in NZ. "Intent". Wording of our tax laws are quite clever. You can't have two family homes. My accountant would never let me get away with that sort of thing. There is tax avoidance and tax evasion. One is legal one is not. Brightline also clarifies things.
You can't have two family homes but you can sell one place, move into the other then sell it a little later. As you haven't purchased the second home within the brightline period there is nothing payable. Also it becomes your new family home as long as you spend 50% of time there.
Do it right and you can then invest in another property, sell the holiday home (no tax) and move there. Intent was to live at the beach, you decided you didn't like it so moved back to town in your investment apartment.No argument there. I said that you can't have two family homes and yes you can do that as often as you like, moving from place to place. Most people don't want to do that and doing a reno while living in a property is a nightmare. The intent to purchase and resell for profit is where the tax kicks in if you don't live there
Brightline is on sale timeline not purchase, so it is relevant to owning more than one property if you don't live in it.
Anytime you purchase property with the intention of selling it for a profit you must pay tax on the profit unless an exemption applies.
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@Snowy said in NZ Politics:
@Crucial said in NZ Politics:
@Snowy said in NZ Politics:
@nzzp said in NZ Politics:
That that distortion becomes a major headache - people move into their investment/home for 6 months to bypass the tax, as it's worth it.
That is still taxable in NZ. "Intent". Wording of our tax laws are quite clever. You can't have two family homes. My accountant would never let me get away with that sort of thing. There is tax avoidance and tax evasion. One is legal one is not. Brightline also clarifies things.
You can't have two family homes but you can sell one place, move into the other then sell it a little later. As you haven't purchased the second home within the brightline period there is nothing payable. Also it becomes your new family home as long as you spend 50% of time there.
Do it right and you can then invest in another property, sell the holiday home (no tax) and move there. Intent was to live at the beach, you decided you didn't like it so moved back to town in your investment apartment.No argument there. I said that you can't have two family homes and yes you can do that as often as you like, moving from place to place. Most people don't want to do that and doing a reno while living in a property is a nightmare. The intent to purchase and resell for profit is where the tax kicks in if you don't live there
Brightline is on sale timeline not purchase, so it is relevant to owning more than one property if you don't live in it.
Anytime you purchase property with the intention of selling it for a profit you must pay tax on the profit unless an exemption applies.
Yeah, but we are talking about Capital Gains here and when they aren't captured as taxable.
I see this as a fairly common scenario. Live in your family home where you work. Buy a 'holiday' property at a beach development and sit on it, maybe doing short term Air BnB rentals to earn income (taxable) and use it yourself at holidays or just rent it out. Intent is to retire to the beach.
Retire, sell the family home (no tax). Move to beach property and that becomes new family home. Invest from family home sale in another property where you do actually want to live. Sell beach house (no tax on capital gains from years of ownership) and move to 'new' place.
You have collected capital gains on two properties (one extra) that aren't taxed.
NZ Politics