Capital Gains Tax proposed

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#2186221 24-Feb-2019 10:49

wsnz:

tdgeek:

Property and shares are not productive. Property is a free gain. Shares, once the IPO has completed has raised the finds for productive business, there after its speculative behaviour. Ive owned lots of shares. It doesn't help the company anymore. They already have the capital.

Companies may have capital but often need more for expansion or to purchase new equipment, and can borrow more based on the valuation of the business, which to a degree, is what the share price represents. Some investors may behave as speculators, but most do not. Those that do are already captured by IRD's regulations surrounding "traders".

Shares and property can most certainly both be productive.

I dont think the share price was is an item not owned by the company is used for a loan valuation. The liability exists only to the nominal value. Shares can be used to access more capital. But once the shares are owned by investors, its their money making game from then on

networkn

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#2186224 24-Feb-2019 10:54

tdgeek:

wsnz:

tdgeek:

That wrong, you are criticising someone who posted along a party line, you are doing the same. All politicians act out. But the National trio are at the top end of wishy washy, SB, loud and aggressive, JC, and a sap, PB. If anything costs them the next election its those three. I watched Simons speech once parliament started, it was embarrassing. He is quiet, but he came out yelling, that's not him its fake. He is not the 2019 Robert Muldoon

That is a very subjective opinion, not an objective fact.

A subjective opinion but darn hard to argue against

Not hard to argue, just not a productive use of time. You often complain against opinion presented as fact, but you appear to do this a lot. I suspect it's maybe a side effect of your abbreviated communication style.

SB has had a few pretty poor moments, but so has JA (IMO her people management skills are far inferior to any PM I can recall in modern times), you have given not an inch on things he has done well. This line of discussion is off topic however, and better discussed elsewhere.

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#2186227 24-Feb-2019 10:57

I used the online CGT calculator. It says a home I purchased previously for say $550k and sell for 1.1M would be due for 15K in CGT. I don't really understand why. The form doesn't specify when I sell it but I assume it's April 2, 2021. It's unlikely that the house has significantly gone up in price in that timeframe. Is it applying some retrospective valuation?

Also, is a mandatory valuation of all capital in NZ going to be required? Will I need to pay thousands to value my business on or prior to April 2021 if this goes through? Maybe I should set up a valuation company in the intervening time to take advantage of the likely increase in valuations.

tdgeek

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#2186237 24-Feb-2019 11:28

networkn:

tdgeek:

wsnz:

tdgeek:

That wrong, you are criticising someone who posted along a party line, you are doing the same. All politicians act out. But the National trio are at the top end of wishy washy, SB, loud and aggressive, JC, and a sap, PB. If anything costs them the next election its those three. I watched Simons speech once parliament started, it was embarrassing. He is quiet, but he came out yelling, that's not him its fake. He is not the 2019 Robert Muldoon

That is a very subjective opinion, not an objective fact.

A subjective opinion but darn hard to argue against

Not hard to argue, just not a productive use of time. You often complain against opinion presented as fact, but you appear to do this a lot. I suspect it's maybe a side effect of your abbreviated communication style.

SB has had a few pretty poor moments, but so has JA (IMO her people management skills are far inferior to any PM I can recall in modern times), you have given not an inch on things he has done well. This line of discussion is off topic however, and better discussed elsewhere.

Same old response if poor National is criticised.

"You often complain against opinion presented as fact," I stated, if you had bothered to read, "A subjective opinion"

If you had also bothered to read the initial post it was about this trio, one of many negative posts about this trio that appears across all sides, I merely added my 2c worth to the rest of the pile. If the said post included JA and anyone else, Im happy to comment and criticise as well, unlike you

If you really want National to regain power, you need to get a reality check on those that are leading the party, they are killing it.

I'll leave to go back to your famed defence mode

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#2186240 24-Feb-2019 11:32

networkn:

I used the online CGT calculator. It says a home I purchased previously for say $550k and sell for 1.1M would be due for 15K in CGT. I don't really understand why. The form doesn't specify when I sell it but I assume it's April 2, 2021. It's unlikely that the house has significantly gone up in price in that timeframe. Is it applying some retrospective valuation?

Also, is a mandatory valuation of all capital in NZ going to be required? Will I need to pay thousands to value my business on or prior to April 2021 if this goes through? Maybe I should set up a valuation company in the intervening time to take advantage of the likely increase in valuations.

I tried your number, I also got 15k, BUT the silly calc updated the figure in real time as you enter them, but to get the correct figure you need to click Calculate.

networkn

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#2186251 24-Feb-2019 11:52

tdgeek:

Same old response if poor National is criticised.

"You often complain against opinion presented as fact," I stated, if you had bothered to read, "A subjective opinion"

If you had also bothered to read the initial post it was about this trio, one of many negative posts about this trio that appears across all sides, I merely added my 2c worth to the rest of the pile. If the said post included JA and anyone else, Im happy to comment and criticise as well, unlike you

If you really want National to regain power, you need to get a reality check on those that are leading the party, they are killing it.

I'll leave to go back to your famed defence mode

I rest my case your honor. Back to CGT Discussion.

networkn

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#2186458 24-Feb-2019 18:57

tdgeek:

networkn:

I used the online CGT calculator. It says a home I purchased previously for say $550k and sell for 1.1M would be due for 15K in CGT. I don't really understand why. The form doesn't specify when I sell it but I assume it's April 2, 2021. It's unlikely that the house has significantly gone up in price in that timeframe. Is it applying some retrospective valuation?

Also, is a mandatory valuation of all capital in NZ going to be required? Will I need to pay thousands to value my business on or prior to April 2021 if this goes through? Maybe I should set up a valuation company in the intervening time to take advantage of the likely increase in valuations.

I tried your number, I also got 15k, BUT the silly calc updated the figure in real time as you enter them, but to get the correct figure you need to click Calculate.

I am using the herald calculator, I am unsure what one you are referring to, as it doesn't have a calculate button, but tried it again just now and I can't determine how it thinks I should owe 15K

Sharesies

Trade NZ and US shares and funds with Sharesies (affiliate link).

tdgeek

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#2186589 24-Feb-2019 22:58

networkn:

tdgeek:

networkn:

I used the online CGT calculator. It says a home I purchased previously for say $550k and sell for 1.1M would be due for 15K in CGT. I don't really understand why. The form doesn't specify when I sell it but I assume it's April 2, 2021. It's unlikely that the house has significantly gone up in price in that timeframe. Is it applying some retrospective valuation?

Also, is a mandatory valuation of all capital in NZ going to be required? Will I need to pay thousands to value my business on or prior to April 2021 if this goes through? Maybe I should set up a valuation company in the intervening time to take advantage of the likely increase in valuations.

I tried your number, I also got 15k, BUT the silly calc updated the figure in real time as you enter them, but to get the correct figure you need to click Calculate.

I am using the herald calculator, I am unsure what one you are referring to, as it doesn't have a calculate button, but tried it again just now and I can't determine how it thinks I should owe 15K

Ok. I used this

http://www.cgtcalculator.co.nz

The Herald one has these fields below which includes the date you sell it, but you said it doesn't have a sell date. Seems to work fine. As the sell year changes, the pre and post CGT ratio changes. The numbers dont quite marry up year on year so there must be a month of the year issue in their calc.If you sold the house in April 2022 (one exact years CGT later) and owned it for exactly 10 years, you would owe 1/10 of the full CGT, as I see it.

"For example. An investment property bought for $550,000 in 2016 and sold for $1.1 million in 2023 is owned for seven years but only subject to capital gains tax for two years from 2021. The calculation can also be used for future purchases."

Use the Herald’s capital gains tax calculator to find out what you would pay on the sale of an investment property. The calculator also shows how returns and taxes would compare for property and the same amount invested in the sharemarket.

What does the property cost?

What is the deposit?

In what year was it purchased?

What is your expected sale price?

In what year do you expect to sell it?

Estimate!

tdgeek

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#2186591 24-Feb-2019 23:05

networkn:

I used the online CGT calculator. It says a home I purchased previously for say $550k and sell for 1.1M would be due for 15K in CGT. I don't really understand why. The form doesn't specify when I sell it but I assume it's April 2, 2021. It's unlikely that the house has significantly gone up in price in that timeframe. Is it applying some retrospective valuation?

Also, is a mandatory valuation of all capital in NZ going to be required? Will I need to pay thousands to value my business on or prior to April 2021 if this goes through? Maybe I should set up a valuation company in the intervening time to take advantage of the likely increase in valuations.

At about 12 years old, 2006, sell in 2022 is about 15k. You mention selling it 2 April 2021, you would then have to pay CGT at the pro rata of 2 days/16 years.

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#2186993 25-Feb-2019 16:28

tdgeek:

CGT is fair. Everyone should pay tax on income. A capital gain is income, deferred till sale time. CGT already exists, this seems to just tidy it up. If we don't want CGT, we need to remove all CGT and all loss writeoffs How can it be fair if some do and some don't? If the tax system was fairer there would already be full CGT or zero CGT

No system is "fair"

Why is tax from rental properties @28% if earned by a business or Trust, but up to 39% if it gets added onto your wage ?

Why is a rental property forced to upgrade insulation, etc etc etc etc, but if privately owned its considered perfectly OK

A CGT is easily avoided, stick the property into a Trust, good for 100 years and can be passed down the generations with zero CGT, then gifted to another Trust. Guess who have their properties in Trusts, yep those in the Beehive.

The next issue is the impact on rents, now matter what you say the CGT will get treated as an expense, that expense will get passed on to tenants. If you can not subsidise the profits using CG, then the profits MUST come from rents.

tdgeek

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#2187001 25-Feb-2019 16:44

sir1963:
tdgeek:

CGT is fair. Everyone should pay tax on income. A capital gain is income, deferred till sale time. CGT already exists, this seems to just tidy it up. If we don't want CGT, we need to remove all CGT and all loss writeoffs How can it be fair if some do and some don't? If the tax system was fairer there would already be full CGT or zero CGT

No system is "fair"

Why is tax from rental properties @28% if earned by a business or Trust, but up to 39% if it gets added onto your wage ?

Why is a rental property forced to upgrade insulation, etc etc etc etc, but if privately owned its considered perfectly OK

A CGT is easily avoided, stick the property into a Trust, good for 100 years and can be passed down the generations with zero CGT, then gifted to another Trust. Guess who have their properties in Trusts, yep those in the Beehive.

The next issue is the impact on rents, now matter what you say the CGT will get treated as an expense, that expense will get passed on to tenants. If you can not subsidise the profits using CG, then the profits MUST come from rents.

They say rents might increase. It didn’t happen when introduced in other countries. You don’t become a landlord to make money from rents. Because you don’t make a worthwhile income from rents. You rent houses to make a capital gain, no other reason. That will become less worthwhile if you have to pay tax on that so some may sell. More likely the fact that house price increases now will take a long while to occur, so time to bail. The sale prices drop. Rents are already high and you can’t get blood from a stone.

GV27

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#2187025 25-Feb-2019 18:15

tdgeek:

They say rents might increase. It didn’t happen when introduced in other countries. You don’t become a landlord to make money from rents. Because you don’t make a worthwhile income from rents. You rent houses to make a capital gain, no other reason. That will become less worthwhile if you have to pay tax on that so some may sell. More likely the fact that house price increases now will take a long while to occur, so time to bail. The sale prices drop. Rents are already high and you can’t get blood from a stone.

How many of those countries brought their CGT in at a time of a massive rental shortage?

Again, there's no point in renting houses to make a capital gain anymore. If you think there isn't going to be upwards pressure on rents from ring-fencing then I have a bridge to sell you. The whole approach to property investment will change, and people keep trying to justify future changes to the tax system based on things that aren't even relevant anymore.

sir1963

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#2187030 25-Feb-2019 18:38

tdgeek:
sir1963:

tdgeek:

CGT is fair. Everyone should pay tax on income. A capital gain is income, deferred till sale time. CGT already exists, this seems to just tidy it up. If we don't want CGT, we need to remove all CGT and all loss writeoffs How can it be fair if some do and some don't? If the tax system was fairer there would already be full CGT or zero CGT

No system is "fair"

Why is tax from rental properties @28% if earned by a business or Trust, but up to 39% if it gets added onto your wage ?

Why is a rental property forced to upgrade insulation, etc etc etc etc, but if privately owned its considered perfectly OK

A CGT is easily avoided, stick the property into a Trust, good for 100 years and can be passed down the generations with zero CGT, then gifted to another Trust. Guess who have their properties in Trusts, yep those in the Beehive.

The next issue is the impact on rents, now matter what you say the CGT will get treated as an expense, that expense will get passed on to tenants. If you can not subsidise the profits using CG, then the profits MUST come from rents.

They say rents might increase. It didn’t happen when introduced in other countries. You don’t become a landlord to make money from rents. Because you don’t make a worthwhile income from rents. You rent houses to make a capital gain, no other reason. That will become less worthwhile if you have to pay tax on that so some may sell. More likely the fact that house price increases now will take a long while to occur, so time to bail. The sale prices drop. Rents are already high and you can’t get blood from a stone.

Tell my tenants who have had their first rent increase ever in the property. The extra costs + the threat of the CGT is the driving force.

I have always adjusted rents as tenants changed, this lot have been in their for 5-6 years. I am eyeing another $30pw before the end of the year.

I have a work colleague who has put his block of 6 units up for auction, he thinks a local property developer will flatten the 6 units and put on 3 town houses.

As I said, CGT is irrelevant, its called a Trust, completely bypasses the governments grab.

sir1963

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#2187034 25-Feb-2019 18:44

networkn:

What happens if you inherit a property and sell it?

How is it's capital "gain" calculated?

I would guess that change of ownership = CG

Thats why putting it in a Trust may be the answer, there is no sale or change of ownership involved

Handle9

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#2187035 25-Feb-2019 18:57

sir1963:

networkn:

What happens if you inherit a property and sell it?

How is it's capital "gain" calculated?

I would guess that change of ownership = CG

Thats why putting it in a Trust may be the answer, there is no sale or change of ownership involved

If you inherit a property there is no CGT due.

Does anyone bother to at least read the summaries before they complain about a new policy?

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