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  Reply # 2184867 21-Feb-2019 14:37
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The real question is why isn't tax paid on all capital gains already. It is income from owning an asset.

 

If I work for $100,000 a year for 10 years and earn $1 million, I pay income tax on that.

 

If I have a business and sell enough to make $1 million in profit, I pay tax on $1 million.

 

If I buy a house for $500,000, and 10 years later sell it for $1,500,000, why should I not pay tax on that $1 million profit?

 

The government isn't planning on taking all the capital gains you get from selling your house, just a fair percentage.


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  Reply # 2184873 21-Feb-2019 14:49
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I don't have an issue with it. As others have said, if you have made money by buying and then selling investment property (which is what investment properties are for) then you should pay tax on it, like any other income.

 

I would like to know what happens to Kiwisaver funds though - will they be taxed when they are drawn down?


 
 
 
 


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  Reply # 2184874 21-Feb-2019 14:53
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Since there is a very loose definition of what constitutes a family these days, how do you define what is a 'family home'?




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  Reply # 2184878 21-Feb-2019 15:01
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trig42:

 

I would like to know what happens to Kiwisaver funds though - will they be taxed when they are drawn down?

 

 

No, because the "fund" is pays the capital gains tax when they buy and sell the items within the Fund, , - in a similar manner to how they do now..


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  Reply # 2184879 21-Feb-2019 15:02
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trig42:

 

I don't have an issue with it. As others have said, if you have made money by buying and then selling investment property (which is what investment properties are for) then you should pay tax on it, like any other income.

 

I would like to know what happens to Kiwisaver funds though - will they be taxed when they are drawn down?

 

 

In your example that's already taxed, as you are in the business of buying and selling property. But there are other forms of CG that are not taxed, that's the idea of this, to tidy it up

 

The issue is, its actually fair to tax ALL income, but because we don't tax all income we don't like it as it SEEMS like a new or extra tax, but we have in fact got off tax free till now. Human nature. 


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  Reply # 2184880 21-Feb-2019 15:02
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Dingbatt: Since there is a very loose definition of what constitutes a family these days, how do you define what is a 'family home'?

 

The dwelling which the taxpayer who receives the capital gain declares to have been his or her principal place of residence.
Presumably there will be something like a statutory declaration to that effect in order to claim an exemption from CGT.

 

This bit is not at all complicated


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  Reply # 2184882 21-Feb-2019 15:04
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I don't have a problem with the idea of CGT.  I have a little bit of a issue however if it hits kiwisaver.  That could make life interesting at 65 if people withdraw money.  If i am reading it right with it being taxed at the rate of income a person is on (i.e. if you earn over the top tax rate you get taxed at that much) could create an issue of older people having to quit their jobs to drop right down to super so they get taxed at the lowest rate.

 

 

 

 


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  Reply # 2184887 21-Feb-2019 15:07
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Dingbatt: Since there is a very loose definition of what constitutes a family these days, how do you define what is a 'family home'?

 

its interesting that they said this in the report:

 

"20. There should be an anti-avoidance provision to stop people from artificially creating a situation where a couple can have two excluded homes."

 

 

 

 

 

 


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  Reply # 2184890 21-Feb-2019 15:13
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tripp:

 

I don't have a problem with the idea of CGT.  I have a little bit of a issue however if it hits kiwisaver.  That could make life interesting at 65 if people withdraw money.  If i am reading it right with it being taxed at the rate of income a person is on (i.e. if you earn over the top tax rate you get taxed at that much) could create an issue of older people having to quit their jobs to drop right down to super so they get taxed at the lowest rate.

 

 

 

 

 

 

The CGT will be the tax payable on captal gain. Plucking random numbers, if the end amount was say $60,000 and contributions were $30,000 and interest (already tax paid) was $15000 the Capital gain is about $15,000 . marginal tax is not much in that example. Most of KW is contributions and taxed interest, CG will be there hopefully but not a massive % I would not expect. I'm not sure if the tax free Australian PIE issue still applies or not? Most of KS in in thst I believe


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  Reply # 2184899 21-Feb-2019 15:23
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Fred99:

 

mattwnz:

 

If they are trying to bring in a CGT to help bring house prices, then that has proven not to work in Oz and UK.

 

 

Well to be fair, as far as Aussie goes, the original CGT introduced by Keating/Hawke back in about 1987 was endlessly watered down with loopholes by each successive liberal national coalition government that it became utterly pointless.

 

 

 

 

I think that will likely happen in NZ too over time if brought in, as I can't see it being reversed, as policies like this are hardly ever reversed. They really need it simple and fair, and they we do already have a CGT on property with the bright line test. What I do wonder though, is if the bring in this CGT and it excludes the family home, whether that means people can buy a home, live in it while doing it up, and then flip it 12 months later, and not pay any tax, and then rinse and repeat. Currently they would likely have to pay CGT, as the intention of buying is to sell for a profit. But if the law excludes the family home from CGT, that could mean that it is excluded? Be interesting to see the detail.


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  Reply # 2184900 21-Feb-2019 15:25
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wellygary:

 

Dingbatt: Since there is a very loose definition of what constitutes a family these days, how do you define what is a 'family home'?

 

its interesting that they said this in the report:

 

"20. There should be an anti-avoidance provision to stop people from artificially creating a situation where a couple can have two excluded homes."

 

 

So a couple "splits" and lives in two houses, would be investigated to see if they're still in a sexual relationship for the purposes of avoiding having one house declared as an investment?

 

Extreme concept possibly, but I wouldn't put it past people to try it...would love to see how that will be proven.





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  Reply # 2184903 21-Feb-2019 15:30
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tripp:

 

I don't have a problem with the idea of CGT.  I have a little bit of a issue however if it hits kiwisaver.  That could make life interesting at 65 if people withdraw money.  If i am reading it right with it being taxed at the rate of income a person is on (i.e. if you earn over the top tax rate you get taxed at that much) could create an issue of older people having to quit their jobs to drop right down to super so they get taxed at the lowest rate.

 

 

 

 

 

 

I suspect that kiwisaver will end up being an exclusion, because it would be political suicide IMO to include it. It means that kiwis end up with less money in retirement. Not fair IMO to change the rules like that, in terms of the impression it gives.

 

 

 

I think taxing landbankers is a good idea.


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  Reply # 2184904 21-Feb-2019 15:34
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davidcole:

 

wellygary:

 

Dingbatt: Since there is a very loose definition of what constitutes a family these days, how do you define what is a 'family home'?

 

its interesting that they said this in the report:

 

"20. There should be an anti-avoidance provision to stop people from artificially creating a situation where a couple can have two excluded homes."

 

 

So a couple "splits" and lives in two houses, would be investigated to see if they're still in a sexual relationship for the purposes of avoiding having one house declared as an investment?

 

Extreme concept possibly, but I wouldn't put it past people to try it...would love to see how that will be proven.

 

 

 

 

There are a lot of older single people who are widowed or split up, who prefer to live by themselves, but a still in full a relationship. For example they may meet later in life, and form a new relationship. It is a lifestyle choice, so I wonder how they are going to police that. It seems very big brother if they were then to force one of those peoples homes to be excluded, and almost seems like the government is dictating how people should be living their lives.


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  Reply # 2184905 21-Feb-2019 15:38
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BlueShift:

 

 

 

If I buy a house for $500,000, and 10 years later sell it for $1,500,000, why should I not pay tax on that $1 million profit?

 

 

 

 

But with this new CGT , you still wouldn' t be paying tax on that million dollar gain if it is your home, as it excludes the family home. If anything this is going to push house prices up, as it makes owning a family home more attractive, especially an expensive one. I read somewhere that people are just going to put more and more money into their home to make it more valuable. 


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  Reply # 2184907 21-Feb-2019 15:41
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mattwnz:

 

BlueShift:

 

If I buy a house for $500,000, and 10 years later sell it for $1,500,000, why should I not pay tax on that $1 million profit?

 

 

But with this new CGT , you still wouldn' t be paying tax on that million dollar gain if it is your home, as it excludes the family home. If anything this is going to push house prices up, as it makes owning a family home more attractive, especially an expensive one. I read somewhere that people are just going to put more and more money into their home to make it more valuable. 

 

 

Then all you do is over-capitalise and think your house if worth 2 million, when all the offers you receive are at 1....therefore you'll pay some CGT on any gains, but then make a big net loss on all your "improvements"....even worse if you have bad taste as well.





Previously known as psycik

OpenHAB: Gigabyte AMD A8 BrixOpenHAB with Aeotech ZWave Controller, Raspberry PI, Wemos D1 Mini, Zwave, Xiaomi Humidity and Temperature sensors and Bluetooth LE Sensors
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