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  Reply # 2187038 25-Feb-2019 19:16
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GV27:

 

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. 

 

 

Wbats the rental shortage here? Is it chronic?  Unless 50,000 houses have been demolished and 50,000 families have arrived, not a lot changes year on year. The issue is the higher rents. Higher property prices mean higher rents to maintain a similar yield. We dont have 50000 families living on park benches. Vancouver and Hong Kong from what I recall were two of the cities in the article I read, they had no rent crisis. Like us they had gone through a boom period. 

 

Given that housing stock is largely unchanged, and population is largely unchanged the base parameters are still there. But people are paying higher rents. If they get scared of CGT based rent increases, they will have 2+ years to wangle themselves into a new home. It could be a new subdivision, it could be Kiwibuild, it could be the some, or a few, or many landlords that aim to quit the properties by April 2021. Builders will see this as a boom, people want out of renting as they are scaremongered. Smart developers will say build now, we will rent to buy, you can pay lower than marker rent as we will add the shortfall to the house, we are all happy. I can see all this happening.

 

Landlords can't beat CGT, rent wise. If a 600k house they feel will rise 2% p.a that's  $12000 per year. The will need to increase rent by $70 per week, there is no budget left for that for most people who are already paying higher rents. So, some will quit. As a bonus there may be some DIY specials from that. The market will sort it out. There is no more rent money left. I doubt house prices will move much anyway medium term as right now the interest rates are very low, which helps the market, but the prices are already too high. There is no reason they can just keep rising medium term, another reason to sell now and pocket the tax free gain.

 

There is no more rent money left. 


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  Reply # 2187039 25-Feb-2019 19:18
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Another option is to remove CGT. Let us all buy houses tomorrow and sell them Friday tax free. Then its an even playing field. Encourage house buying, DIY specials, renting. Im ok with full CGT or no CGT


 
 
 
 


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  Reply # 2187041 25-Feb-2019 19:24
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I see that small vusiness owners will now need to choose between the Tax breaks they can claim on their one room in the house they use as a home office, and their home included in CGT. 

 

I sincerely hope that Ms Ardern shows she has integrity after comments made according to this article: 

 

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12207174

 

"Small businesses and farming are crucial to New Zealand's economy and I want to be clear that the effects on them will be top of my mind when assessing options," she said at her post cabinet press conference.

 

"I want them to know that I hear them."

 

 

 

 

 

 


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  Reply # 2187047 25-Feb-2019 19:33
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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.

 

 

 

 

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. 

 

 

You've lost me? 

 

Are you saying they are going to not going to use the value of the house at the time the tax is introduced? I would expect to pay CGT on the increase in value of the home between the introduction of the law and the sale of the property. If they are going back in time...


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  Reply # 2187048 25-Feb-2019 19:35
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networkn:

 

I see that small vusiness owners will now need to choose between the Tax breaks they can claim on their one room in the house they use as a home office, and their home included in CGT. 

 

I sincerely hope that Ms Ardern shows she has integrity after comments made according to this article: 

 

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12207174

 

"Small businesses and farming are crucial to New Zealand's economy and I want to be clear that the effects on them will be top of my mind when assessing options," she said at her post cabinet press conference.

 

"I want them to know that I hear them."

 

 

 

 

 

 

 

 

she will also have to prey a lot if they want to pass the tax especially when you have polls that show 80% of people against the tax introduction





Common sense is not as common as you think.


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  Reply # 2187051 25-Feb-2019 19:38
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I am not against it per se, but I have issues with some of the TWG's findings and recommendations as it relates to it.

 

 


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  Reply # 2187067 25-Feb-2019 19:49
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tdgeek:

 

There is no more rent money left. 

 

 

Remember how student allowances went up and for some, inexplicable and entirely unpredictable reason, the rent for most Wellington student flats also went up by that a week?

 

What do you think is going to happen to that tax cut at the lower end? Where do you think that's going to end up?

 

If they managed to push people with rents this far and have gotten away with it, then landlords will keep being able to justify just a little bit more. 


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  Reply # 2187068 25-Feb-2019 19:50
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sir1963:

 

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

 

 

I'm really unsure why you think this won't apply to Trusts when there are already established specific rules around what a Trust property has to be in order to qualify for a Brightline exemption. There's no reason to think that a CGT would be any different considering it's essentially the same thing. 


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  Reply # 2187092 25-Feb-2019 21:07
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GV27:

 

tdgeek:

 

There is no more rent money left. 

 

 

Remember how student allowances went up and for some, inexplicable and entirely unpredictable reason, the rent for most Wellington student flats also went up by that a week?

 

What do you think is going to happen to that tax cut at the lower end? Where do you think that's going to end up?

 

If they managed to push people with rents this far and have gotten away with it, then landlords will keep being able to justify just a little bit more. 

 

 

 

 

There is that $1.20/hr rise in the minimum wage happening just weeks away.


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  Reply # 2187129 25-Feb-2019 23:22
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networkn:

 

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. 

 

 

 

You've lost me? 

 

Are you saying they are going to not going to use the value of the house at the time the tax is introduced? I would expect to pay CGT on the increase in value of the home between the introduction of the law and the sale of the property. If they are going back in time...

 

 

Actually yeah, according to these.  I was messing around with the calcs figuring out how they got the results (same results) that I overlooked that. They all work on the gain from what it cost.The Herald takes the gain, in this case 550k, and treats it as linear across the ownership period, so the post 2021 lineal amount is the taxable gain, i.e. from April 2021.  Everyone knows its a Valuation Day CGT, so the calculator should have ignored the purchase amount and date and taken the Valuation on 1 April. OR, there is an option to use the ownership period and draw the line on 1 April 2021. Which assumes the gain is the same year on year. Confirmed by them stating

 

For example. An investment property bought for $800,000 in 2016 and sold for $1.2 million in 2023 is owned for seven years but only subject to capital gains tax for two years from 2021. 

 

@GV27 may know. Your example was buy 550k sell 1.1M Its more than possible, that the 1 April 2021 valuation might in fact be 1.2 M as post boom the property dropped, hence a capital loss.  


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  Reply # 2187131 25-Feb-2019 23:24
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vexxxboy:

 

networkn:

 

I see that small vusiness owners will now need to choose between the Tax breaks they can claim on their one room in the house they use as a home office, and their home included in CGT. 

 

I sincerely hope that Ms Ardern shows she has integrity after comments made according to this article: 

 

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12207174

 

"Small businesses and farming are crucial to New Zealand's economy and I want to be clear that the effects on them will be top of my mind when assessing options," she said at her post cabinet press conference.

 

"I want them to know that I hear them."

 

 

 

 

 

 

 

 

she will also have to prey a lot if they want to pass the tax especially when you have polls that show 80% of people against the tax introduction

 

 

Not seen that, I saw something today that showed something like 46% wanted it, 41% didn't. I assize thats based on employees who get a tax cut, bit the numbers dont make sense if thats the case


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  Reply # 2187132 25-Feb-2019 23:27
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GV27:

 

tdgeek:

 

There is no more rent money left. 

 

 

Remember how student allowances went up and for some, inexplicable and entirely unpredictable reason, the rent for most Wellington student flats also went up by that a week?

 

What do you think is going to happen to that tax cut at the lower end? Where do you think that's going to end up?

 

If they managed to push people with rents this far and have gotten away with it, then landlords will keep being able to justify just a little bit more. 

 

 

I didnt think of the tax cut, but that's only $10 per week or a bit more? Yes, thats possible, probably likely. My example needs $70 though. 


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  Reply # 2187133 25-Feb-2019 23:30
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sir1963:

 

GV27:

 

tdgeek:

 

There is no more rent money left. 

 

 

Remember how student allowances went up and for some, inexplicable and entirely unpredictable reason, the rent for most Wellington student flats also went up by that a week?

 

What do you think is going to happen to that tax cut at the lower end? Where do you think that's going to end up?

 

If they managed to push people with rents this far and have gotten away with it, then landlords will keep being able to justify just a little bit more. 

 

 

 

 

There is that $1.20/hr rise in the minimum wage happening just weeks away.

 

 

True. People below that will get that increase, low paid people above it as well, but at some point Ilm not sure if others will get the sympathy increase, probably just get the usual as per the company's review policy. Employees being paid say the average wage won't get your x% annual review plus $1-20 per hour. 


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  Reply # 2187137 25-Feb-2019 23:39
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networkn:

 

I see that small vusiness owners will now need to choose between the Tax breaks they can claim on their one room in the house they use as a home office, and their home included in CGT. 

 

I sincerely hope that Ms Ardern shows she has integrity after comments made according to this article: 

 

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12207174

 

"Small businesses and farming are crucial to New Zealand's economy and I want to be clear that the effects on them will be top of my mind when assessing options," she said at her post cabinet press conference.

 

"I want them to know that I hear them."

 

 

 

 

I think the article says it all. That CGT will go through, but small businesses and farmers will have a diluted calculation. She is basically saying just that. The easiest way is to set a threshold. I'd bet money on this or similar.  Under the threshold is tax free. Maybe another level at a low tax rate, then after that, standard status. 


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  Reply # 2187158 26-Feb-2019 06:54
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Simplicity has crunched the numbers on Kiwisaver:

 

http://www.scoop.co.nz/stories/BU1902/S00631/cgt-benefits-low-income-kiwisavers-at-high-earners-expense.htm

 

Basically if you earn over $68K you will be worse off by tens of thousands of dollars; except the impact is hidden because it's money you don't "miss out on" until you turn 65. 

 

So most police officers, nurses with more than three years experience and probably a bunch of teachers as well. 

 

Fairrrrnesssssssssssss


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