tdgeek:

 

Nov/Dec it was 2/3 of sales

 

Irrelevant , I could probably find a hour where it was 100%, for either side.

Fred99:

 

sir1963:

 

"New Zealand has no capital gains tax, so you won’t be taxed on profits you make selling a business"

 

 

Yes - but see above.  When you're a landlord selling a house for a profit, you're selling an asset owned by the business - you're not selling the "business" per se. 

 

Unfortunately that is not true because each property is ring fenced and is stand alone for tax purposes.

It is also not true where businesses own multiple locations and sell one off, businesses do that all the time for sound business reasons.

There is no Ah-Ha or gotcha here, the tax law does NOT work the way you think it does.

sir1963:

 

So the next investment average people can understand is property , it makes a better return than the bank offers, and unlike the last 100 or so years its even been out performing the sharemarket. Good financial management almost dictates investment in property.

 

It's probably been outperforming the sharemarket by far more than most people think too.
Reason being that the usual measure of long term share market performance is based on looking at market indices, those indices made up from a basket of shares in companies, and there's always churn as the worst performers are dropped off the index and new well performing companies replace them.  So if you held on to a basket of shares of all 30 companies listed on the Dow Jones 20 years ago, 17 of them have gone, either gone bust, merged, or declined in value so much they were replaced on the index.

Then 100 years ago, an affordable average house might have been on 1/4 acre in Remuera. 

sir1963:

 

 

 

Unfortunately that is not true because each property is ring fenced and is stand alone for tax purposes.

 

It is also not true where businesses own multiple locations and sell one off, businesses do that all the time for sound business reasons.

 

There is no Ah-Ha or gotcha here, the tax law does NOT work the way you think it does.

 

Wait  my understanding is that each property isn't ring fenced, the investment properties are ring fenced from the owners other income.  If I owned five investment properties through a single LTC then they aren't ring fenced from each other but they are ring fenced from my salary as a whatever. 

I'm not an accountant so may be wrong.

sir1963:

 

Fred99:

 

Yes - but see above.  When you're a landlord selling a house for a profit, you're selling an asset owned by the business - you're not selling the "business" per se. 

 

 

Unfortunately that is not true because each property is ring fenced and is stand alone for tax purposes.

 

It is also not true where businesses own multiple locations and sell one off, businesses do that all the time for sound business reasons.

 

There is no Ah-Ha or gotcha here, the tax law does NOT work the way you think it does.

 

You think so?

From IRD:

Asset sales can be used to buy or sell any type of business, whether the whole business or part of it. You need to know how income tax applies to each kind of asset, as this affects the tax you’ll pay or the expenses you can claim in your return.

Generally, where the assets sold are used as part of the day to day running of the business, the:

• buyer can claim the purchase as an allowable expenses
• seller will also have to declare the same as income.

blackjack17:

 

sir1963:

 

 

 

Unfortunately that is not true because each property is ring fenced and is stand alone for tax purposes.

 

It is also not true where businesses own multiple locations and sell one off, businesses do that all the time for sound business reasons.

 

There is no Ah-Ha or gotcha here, the tax law does NOT work the way you think it does.

 

 

 

 

Wait  my understanding is that each property isn't ring fenced, the investment properties are ring fenced from the owners other income.  If I owned five investment properties through a single LTC then they aren't ring fenced from each other but they are ring fenced from my salary as a whatever. 

 

I'm not an accountant so may be wrong.

 

They are either or now I have done some more searching and reading. My opinion was based on a preliminary assessment by my accountant. Here is a link with more info

https://www2.deloitte.com/nz/en/pages/tax-alerts/articles/ring-fencing-residential-rental-property-losses.html

https://www.bdo.nz/en-nz/insights/tax/an-update-on-ring-fencing

"There are advantages and disadvantages with each option that will need to be considered in light of your circumstances. "

Either way selling one property in a pool of properties does not change the nature of the business, ie being a landlord.

The bright line test was bought in not because landlords were pretending to be property developers, but because property developers were trying to avoid taxes by pretending to be landlords.

sir1963:

 

Irrelevant , I could probably find a hour where it was 100%, for either side.

 

It is entirely relevant because it quantifies the current levels of investor activity in the market. It doesn't become less relevant because you don't like the answer. 

Fred99:

 

You think so?

 

From IRD:

 

Selling business assets

 

Asset sales can be used to buy or sell any type of business, whether the whole business or part of it. You need to know how income tax applies to each kind of asset, as this affects the tax you’ll pay or the expenses you can claim in your return.

 

Generally, where the assets sold are used as part of the day to day running of the business, the:

 

• buyer can claim the purchase as an allowable expenses
• seller will also have to declare the same as income.

Your problem lies in the fact that buying property is not considered an expense and is therefore not tax deductible  and nor is it used as part of the daily running of the business.

A car, a computer, tools, desk, phone, printer, photocopier , etc , those are the things that are assets for the day to day running of the business.

Rentals/property has been bought and sold for a very very long time, and you think the IRD has just not noticed this ? Seriously...???

This is why law is difficult, the words also depend on the courts interpretation of those words (Case law) and why we have things like the bright line test to clarify from government the intention of the law. In behind this will be a huge raft of definitions, interpretations, etc etc etc.

The complete lack of action from IRS is not because the do not know, or are lazy or incompetent, its because they know the law does not work they want you want it to. In the USA First Amendment Auditors do this all the time "I am not driving, I am travelling and its my right to freely travel" says every FAA who then end up find they are wrong every time, and yet the rinse and repeat.

GV27:

 

sir1963:

 

Irrelevant , I could probably find a hour where it was 100%, for either side.

 

 

It is entirely relevant because it quantifies the current levels of investor activity in the market. It doesn't become less relevant because you don't like the answer. 

 

No its irrelevant because you are data selecting.

As I say I can probably find some time/day/week where that stats are completely different.

What you are in effect saying is climate change is a hoax because its cold this week.

sir1963:

 

No its irrelevant because you are data selecting.

 

As I say I can probably find some time/day/week where that stats are completely different.

 

What you are in effect saying is climate change is a hoax because its cold this week.

 

https://www.rbnz.govt.nz/financial-stability/financial-stability-report/fsr2015-05/investors-and-the-new-zealand-housing-market

This is inane. 

Income has various meanings based on the income tax act, taxable income and non taxable income. Each is specific to the business activity undertaken and the laws surrounding the tax treatment of income and expenses is complex (hence why even among accountants, there are specific tax specialists).

So in very basic language, yes Fredd, the asset sale is treated as income, but whether or not the income is subject to a tax liability is a separate and potentially complicated issue.

I have only done one tax paper as part of my accounting degree so am far from a tax expert so can't comment specifically on the ins and outs of tested cases, but the wording of tax law is very specific, as are the interpretations. Have a look at the income tax act, there are numerous sections that refer to other sections that may or may not have implications and then there are exceptions to those clauses contained elsewhere. Its a minefield to try and interpret.

GV27:

 

sir1963:

 

No its irrelevant because you are data selecting.

 

As I say I can probably find some time/day/week where that stats are completely different.

 

What you are in effect saying is climate change is a hoax because its cold this week.

 

 

https://www.rbnz.govt.nz/financial-stability/financial-stability-report/fsr2015-05/investors-and-the-new-zealand-housing-market

 

This is inane. 

 

Great, you are not good at interpreting graphs and how the axis are relevant. By lengthening or shortening the Y axis,  that graph will look very very different.

https://www.stuff.co.nz/life-style/homed/housing-affordability/300261813/calls-for-first-home-buyers-to-be-exempt-from-brightline-test

sir1963:

 

Fred99:

 

You think so?

 

From IRD:

 

Selling business assets

 

Asset sales can be used to buy or sell any type of business, whether the whole business or part of it. You need to know how income tax applies to each kind of asset, as this affects the tax you’ll pay or the expenses you can claim in your return.

 

Generally, where the assets sold are used as part of the day to day running of the business, the:

 

• buyer can claim the purchase as an allowable expenses
• seller will also have to declare the same as income.

 

Your problem lies in the fact that buying property is not considered an expense and is therefore not tax deductible  and nor is it used as part of the daily running of the business.

 

A car, a computer, tools, desk, phone, printer, photocopier , etc , those are the things that are assets for the day to day running of the business.

 

Rentals/property has been bought and sold for a very very long time, and you think the IRD has just not noticed this ? Seriously...???

 

Buying property for use by a business is a business expense, it's even able to be depreciated, and as such IRD will recover tax rebates previously paid if the sale price is above book value - so your wrong, it's treated the same as a car or whatever, just at a different depreciation rate.

As for the land the property is on by a business:

The profits from the sale of residential land (and any buildings on it) is generally taxable if you bought the land either:

• on or after 29 March 2018 and sold it within 5 years of buying it
• intending to resell it and do so at any time.

Other taxable land sales include:

• land bought for a business you or an associate run that deals in, develops, subdivides, or erects buildings on land
• land bought, regardless of whether or not the land was bought for the business, if you or an associate run a business that deals in, develops, subdivides, or erects buildings on land and the land is sold within 10 years.

sir1963:

 

Great, you are not good at interpreting graphs and how the axis are relevant. By lengthening or shortening the Y axis,  that graph will look very very different.

 

All the lines about that graph are about 30% for a nine-year period. 

You told me off for talking about one month. You said you could find an hour, so that made my point less relevant.

Now I am showing you nine years of investor activity, above 30%, and still you're trying to suggest it isn't representative because of the Y axis?