Housing crisis!

Forums › Off topic › Housing crisis!

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ... | 11

2120 posts

Uber Geek

#868989 30-Jul-2013 23:40

mattwnz:
We are talking about houses/property that rise in value over time, which are essentially assets. Most things that are sold on trademe lose value, and are consumables, and I am sure the government would want to refund taxes on their loss. eg loss in value of a car.

When you own an investment property, the goal is to make money on the sale/use of the property - the financial gain is income, that is not the case for most home owners, whose house's rise in value with the rest of the neighbourhood, or individually because of other reasons like improvements and when selling the value is used to help pay for their next family home.

I think a capital gains tax would be suitable only for 'investment properties' and include holiday homes if the capital gain is 10% higher than current property valuation - with a clause that classifies a holiday home as a home that does not receive any income from rental/temp lease.

I've said enough but I disagree with any tax on the sale of personal property that isn't a traditional investment for gaining income.

kiwirock

685 posts

Ultimate Geek

#868990 30-Jul-2013 23:47

mattwnz:
networkn:
mattwnz:
networkn: A CGT is not something I am against per se, however it needs to be introduced lightly at least at first to Exclude the 1 house you live in (even if you sell it and buy another) and 1 investment property.

That is how I think it will be introduced, and if labour get back in (with a leadership change), as that is one of htie core policies, it will be a given. But unfortionately people will get around it, by perhaps putting the house under a child name or using trusts. The richest people usually find a way around these things. THis is why I think it needs to apply to all, which it will probabky happen eventually anyway. A stamp duty is another additional tax too, that could be applied.

Do you know anything about trusts? You can set one up for next to nothing. It's not a vehicle for the wealthy exclusively, lots of low income (relatively) and lots and lots and lots of middle income people have them.

If you are hoping Labour will save the world I would look again. The last few "policies" they have suggested have been LOL.

If you want something sure fire to help you build wealth, get educated, work hard, sacrifice and save.

Yes, and I know many trusts are not setup correctly, and could be seen a sham trusts due to this. Some people set them up so they don't have any assets in their name, so if they go into rest homes they can get a full subsidy, but now the government can claw that money back.

Personally I am not a labour fan and I would never vote for them, but I know that housing is a problem that is causing other problems in the economy, and at least they see this, if only as a vote grabber.

Come down to Tim Shadbolt land. Traffic's terrible, takes 4 minutes to drive to town and houses are way over priced, $180,000 won't buy you anymore than a crummy little 4 bedroom room house and double garage. :o)

mattwnz

20141 posts

Uber Geek

#868991 30-Jul-2013 23:52

macuser:
mattwnz:
We are talking about houses/property that rise in value over time, which are essentially assets. Most things that are sold on trademe lose value, and are consumables, and I am sure the government would want to refund taxes on their loss. eg loss in value of a car.

When you own an investment property, the goal is to make money on the sale/use of the property - the financial gain is income, that is not the case for most home owners, whose house's rise in value with the rest of the neighbourhood, or individually because of other reasons like improvements and when selling the value is used to help pay for their next family home.

I think a capital gains tax would be suitable only for 'investment properties' and include holiday homes if the capital gain is 10% higher than current property valuation - with a clause that classifies a holiday home as a home that does not receive any income from rental/temp lease.

I've said enough but I disagree with any tax on the sale of personal property that isn't a traditional investment for gaining income.

There always could be an exclusion when buying and selling at the same time in the same market. But isn't that the agrement as to why they think CGT will help to bring down house prices? Becuase it will mean that people after selling, will have less money to purchase the next house with.

mattwnz

20141 posts

Uber Geek

#868992 30-Jul-2013 23:53

kiwirock:

Come down to Tim Shadbolt land. Traffic's terrible, takes 4 minutes to drive to town and houses are way over priced, $180,000 won't buy you anymore than a crummy little 4 bedroom room house and double garage. :o)

It's very tempting...apart from the weather :)

networkn

Networkn
32349 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#868995 31-Jul-2013 00:37

ajobbins:
networkn:
http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rptpath=350-5748-3399-&132=PROPERTY&134=&153=&29=&122=0&122=0&49=100000&49=150000&178=0&178=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0

This is the very first thing I found by filtering 100-150K on trademe under property. Perhaps you can't live in Auckland if you don't have the means, however I get an email most months from some real estate place in Auckand CBD that specializes in apartments and there are plenty there under 200K. Two of my staff THIS YEAR bought houses well under 400K

Unfortunately a big city is the reality for many people with professional careers. There just aren't the jobs in other places. IT is a good example of this, the industry is HEAVILY concentrated in Auckland, Wellington and to a lesser extent Christchurch and Hamilton. It's very good and well saying go and by a $150,000 house in Rotorua, but there is a good chance you won't get a job there and if you do, the salary and potential growth (both in money and experience terms) is less.

I looked through a few pages of you link, and almost all of the sub-$200k apartments listed are 'investment' apartments. Ie. they are part of managed complexes for students or services apartment hotels. You can't live in them yourself.

It's also worth noting that banks have MUCH stricter requirements on lending for apartments (due to the fact you don't own a block of land ie. the bit that appreciates in value). When I was looking a couple of years back, the bank told me they generally require a 30-50% deposit for apartments, depending on the risk profile. That means, even if you can get an apartment in Auckland for say $180k, you might still be asked for a $90k deposit.

Sounds like excuses in the main. Nonsense you can't live in them yourself. How can they dictate or control that? I know a NUMBER of people who bought those apartments and lived in them which gave them an excellent base to buy their next home. They had no issues getting finance from banks and certainly did NOT require 90K (or even close to it) for a deposit.

Regardless, not all of those were investment properties and there are certainly other resources for finding cost effective housing.

Lower value house = Lower value mortgage, less interest, more principle paid back, money saved every year you have a mortgage.

You can say what you want, but at the end of the day, people DO have choices and options, but most people complaining about these situations aren't prepared to compromise and expect everyone to hand everything to them easily.

kiwirock

685 posts

Ultimate Geek

#868996 31-Jul-2013 00:45

networkn:
Compare that to Y (hine) generation. Y not me, Y can't I have it now instead of working for it, Y can't I have a 100K job fresh out of college.

Very true about gen Y. Unfortunately Gen Y has been sucked in by 100% loans, credit card debt, abundance of advertising and peer pressure to have the latest gadgets now not later. Now what happens if Gen Y stop getting debt and stop circulating wealth to others like who they buy things from? Which generation is pushing all this on to gen Y? The only way you can be financially free, is to use other peoples money. When I say financially free, not having to work. That comes from the generation in front of Gen Y and from quite well off investors. Notice the rich kids usually don't like work, because 10% of the worlds population hold around 90% of the wealth, or is it 1% now hold 99%, making the next shift 0.1% holding 99.9% of the wealth or until a war starts or financial collapse happens. Then who will pay... the 90% who work for 10% of the wealth.

How many investment properties are out there because the owner leveraged the deposit from another property and used 80% of other peoples money to create more cash-flow for themselves? Debt is how the world works and keeps people in work and having to work for more money, but it's easy money and it doesn't really create any real tangible resource/product anymore. It can be created on paper. So why not just get instant debt now with no thought to the consequences? Because that is the acceptable norm in today's monetary system - debt is currency and those that loan to those that need it don't have to really work and Gen Y's attitude creeps in.

Why should we always expect a mortgage to home ownership though? That immediately makes houses worth more because people will pay twice as much as they borrow to cover the interest over what it's really worth full stop. Most want to be in a home, rather than in a foreigners property. But if you have a property, and it's got say $70,000 in equity in it, then that's enough for another mortgage for an investor and banks like people that know how to make the bank richer and themselves richer - banks only really lend to those that don't need it. Getting on the ladder is really important before investors keep snatching up properties which is easier if their foot is already in the door.

A 20% deposit for first home buyers is terrible. An increase to deposit rates for investment mortgages to landlords should have their deposit rate go up to say 30% from the already norm of 20%. I'm sure that'll dampen down the rental market that's fueling increased housing costs so people that actually live in Auckland own the homes. The housing market is a great example of when turning an important resource in to a capitalist income blows things out of proportion.If they regulate who can invest in housing, we 'might' drop the price of housing, but by still making it harder for those who want to get it. It makes no sense to me, it's just another way of going through the same underlying issue. Except it's wrapped in packaging that claims it'll fix it. It's not even really a patch it job.

Perhaps gen Y are an ugly look in to the evolution of the world's way of creating equal rights and shifting to some other monetary system in the future...

kiwirock

685 posts

Ultimate Geek

#868997 31-Jul-2013 00:55

mattwnz:
kiwirock:

Come down to Tim Shadbolt land. Traffic's terrible, takes 4 minutes to drive to town and houses are way over priced, $180,000 won't buy you anymore than a crummy little 4 bedroom room house and double garage. :o)

It's very tempting...apart from the weather :)

Yes it's my number one complaint. But when it snows, a 4x4 is pocket money fun after selling a house in Auckland and it's still daylight after 10pm in summer so getting together with mates doesn't require energy savings.

Running a fireplace is also a great thing to have company beside late at night.

When I watch the problems facing Auckland's housing, I really can't fathom spending that on something up there instead of in an alpine lake town like Wanaka or Queenstown. The houses in Auckland look as boring as the $130,000 one's here.

Equinox IT

Cloud spending continues to surge globally, but most organisations haven’t made the changes necessary to maximise the value and cost-efficiency benefits of their cloud investments. Download the whitepaper From Overspend to Advantage now.

matisyahu

1623 posts

Uber Geek

Trusted

#869000 31-Jul-2013 03:25

The housing crisis first and foremost isn't a NZ crisis but an Auckland issue and the solution is to either through encouragement or force get businesses to relocate from Auckland to other parts of the country which will lead to less demand, less concentration of the population in Auckland thus prices will either stagnate or reduce. It dumb founds me when I hear businesses who whine about the cost of renting yet still insist on moving up to Auckland to have their head office up there - has someone informed these people that there is the technology which makes needing to have a head quarters in a major city pretty much moot these days?

"When the people are being beaten with a stick, they are not much happier if it is called 'the People's Stick'"

nathan

5695 posts

Uber Geek
Inactive user

#869002 31-Jul-2013 03:49

We should have a comprehensive capital gains tax, with no exemptions, including the family home. To discourage tax avoidance

Then income and company tax rates must drop by the equivalent amount

MikeB4

18435 posts

Uber Geek

ID Verified

Trusted

#869013 31-Jul-2013 07:21

nathan: We should have a comprehensive capital gains tax, with no exemptions, including the family home. To discourage tax avoidance

Then income and company tax rates must drop by the equivalent amount

Capital gains tax stifles investment and will remove what little venture capital is made available in New Zealand. It also reduces fiscal growth and will reverse small gains of a CGT. The best way to fund retirement cost is economic growth, grow the economy, eliminate unemployment thus increase the tax take.

tripp

3848 posts

Uber Geek

Trusted

Lifetime subscriber

#869015 31-Jul-2013 07:48

networkn:
ajobbins:
networkn:
http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rptpath=350-5748-3399-&132=PROPERTY&134=&153=&29=&122=0&122=0&49=100000&49=150000&178=0&178=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0

This is the very first thing I found by filtering 100-150K on trademe under property. Perhaps you can't live in Auckland if you don't have the means, however I get an email most months from some real estate place in Auckand CBD that specializes in apartments and there are plenty there under 200K. Two of my staff THIS YEAR bought houses well under 400K

Unfortunately a big city is the reality for many people with professional careers. There just aren't the jobs in other places. IT is a good example of this, the industry is HEAVILY concentrated in Auckland, Wellington and to a lesser extent Christchurch and Hamilton. It's very good and well saying go and by a $150,000 house in Rotorua, but there is a good chance you won't get a job there and if you do, the salary and potential growth (both in money and experience terms) is less.

I looked through a few pages of you link, and almost all of the sub-$200k apartments listed are 'investment' apartments. Ie. they are part of managed complexes for students or services apartment hotels. You can't live in them yourself.

It's also worth noting that banks have MUCH stricter requirements on lending for apartments (due to the fact you don't own a block of land ie. the bit that appreciates in value). When I was looking a couple of years back, the bank told me they generally require a 30-50% deposit for apartments, depending on the risk profile. That means, even if you can get an apartment in Auckland for say $180k, you might still be asked for a $90k deposit.

Sounds like excuses in the main. Nonsense you can't live in them yourself. How can they dictate or control that? I know a NUMBER of people who bought those apartments and lived in them which gave them an excellent base to buy their next home. They had no issues getting finance from banks and certainly did NOT require 90K (or even close to it) for a deposit.

Regardless, not all of those were investment properties and there are certainly other resources for finding cost effective housing.

Lower value house = Lower value mortgage, less interest, more principle paid back, money saved every year you have a mortgage.

You can say what you want, but at the end of the day, people DO have choices and options, but most people complaining about these situations aren't prepared to compromise and expect everyone to hand everything to them easily.

Ok I think you need to read up on some of these places, I have also done research into getting a cheap (under 200k) apartment and banks need a lot for the deposit, i was told by my bank (after being pre-approved) that i would need 40 - 50% for an apartment, also the body corp fees can be a real killer on top of the mortgage payments.
Some apartments in auckland also have some really funny rules about power and water i.e. you can't pick your power company and you must pay "management company/body corp" for the power/water (with seem to be really high with some funny fees hiding in the unit price).
I had a friend buy into one place where he could not get supplied his pick of internet companies as the body corp would not let him install a phone line and had to use what the "management company" supplied in the lines of internet, end up costing him a crap load in fees etc as the management company was milking phone/internet usage and charging way to much.

A number of these cheap places do have contracts around them saying that they must be "rented" and are investment as management is done by a 3rd party.

You also can't change a thing about the place you live in, want to paint the inside, no you need the OK from body corp, want to put in a new kitchen or change something, no you need the OK from body corp.
Body corp tend to say no as they want everything to look the same.
Want to have a pet cat/dog, no
want a plant on the deck, no

Makes reselling very hard as well, the only people that would buy them is someone that will rent it out to students or people that work in town.

Now I work in auckland as I am in IT and need to be in a big city as there is no IT jobs from my home town (lucky to have 2 on seek.co.nz a year, i know i have a email sent when listed).
I am single and there is no way i can afford to buy in auckland, so I will just save money i make up here and then when i am ready i will buy back in my home time and go back there, but I can understand why the younger gen gets really pee'd off trying to buy in auckland.

I would be really happy if i could buy a place somewhere out of auckland and just remote into work. Until more companies look at doing this then auckland/wellington etc will have this problem

macuser

2120 posts

Uber Geek

#869019 31-Jul-2013 08:05

mattwnz:

It's far cheaper to own a second home as a rental property than it is to buy your first home, because your expenses are tax deductible, this is why so many people have them and it's driving up property values.

http://www.ird.govt.nz/income-tax-individual/different-income-taxed/rental-income/inc-invest-property/

networkn

Networkn
32349 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#869061 31-Jul-2013 09:09

mrtoken:
networkn:
ajobbins:
networkn:
http://www.trademe.co.nz/Browse/CategoryAttributeSearchResults.aspx?search=1&cid=5748&sidebar=1&rptpath=350-5748-3399-&132=PROPERTY&134=&153=&29=&122=0&122=0&49=100000&49=150000&178=0&178=0&sidebarSearch_keypresses=0&sidebarSearch_suggested=0

This is the very first thing I found by filtering 100-150K on trademe under property. Perhaps you can't live in Auckland if you don't have the means, however I get an email most months from some real estate place in Auckand CBD that specializes in apartments and there are plenty there under 200K. Two of my staff THIS YEAR bought houses well under 400K

Unfortunately a big city is the reality for many people with professional careers. There just aren't the jobs in other places. IT is a good example of this, the industry is HEAVILY concentrated in Auckland, Wellington and to a lesser extent Christchurch and Hamilton. It's very good and well saying go and by a $150,000 house in Rotorua, but there is a good chance you won't get a job there and if you do, the salary and potential growth (both in money and experience terms) is less.

I looked through a few pages of you link, and almost all of the sub-$200k apartments listed are 'investment' apartments. Ie. they are part of managed complexes for students or services apartment hotels. You can't live in them yourself.

It's also worth noting that banks have MUCH stricter requirements on lending for apartments (due to the fact you don't own a block of land ie. the bit that appreciates in value). When I was looking a couple of years back, the bank told me they generally require a 30-50% deposit for apartments, depending on the risk profile. That means, even if you can get an apartment in Auckland for say $180k, you might still be asked for a $90k deposit.

Sounds like excuses in the main. Nonsense you can't live in them yourself. How can they dictate or control that? I know a NUMBER of people who bought those apartments and lived in them which gave them an excellent base to buy their next home. They had no issues getting finance from banks and certainly did NOT require 90K (or even close to it) for a deposit.

Regardless, not all of those were investment properties and there are certainly other resources for finding cost effective housing.

Lower value house = Lower value mortgage, less interest, more principle paid back, money saved every year you have a mortgage.

You can say what you want, but at the end of the day, people DO have choices and options, but most people complaining about these situations aren't prepared to compromise and expect everyone to hand everything to them easily.

Ok I think you need to read up on some of these places, I have also done research into getting a cheap (under 200k) apartment and banks need a lot for the deposit, i was told by my bank (after being pre-approved) that i would need 40 - 50% for an apartment, also the body corp fees can be a real killer on top of the mortgage payments.
Some apartments in auckland also have some really funny rules about power and water i.e. you can't pick your power company and you must pay "management company/body corp" for the power/water (with seem to be really high with some funny fees hiding in the unit price).
I had a friend buy into one place where he could not get supplied his pick of internet companies as the body corp would not let him install a phone line and had to use what the "management company" supplied in the lines of internet, end up costing him a crap load in fees etc as the management company was milking phone/internet usage and charging way to much.

A number of these cheap places do have contracts around them saying that they must be "rented" and are investment as management is done by a 3rd party.

You also can't change a thing about the place you live in, want to paint the inside, no you need the OK from body corp, want to put in a new kitchen or change something, no you need the OK from body corp.
Body corp tend to say no as they want everything to look the same.
Want to have a pet cat/dog, no
want a plant on the deck, no

Makes reselling very hard as well, the only people that would buy them is someone that will rent it out to students or people that work in town.

Now I work in auckland as I am in IT and need to be in a big city as there is no IT jobs from my home town (lucky to have 2 on seek.co.nz a year, i know i have a email sent when listed).
I am single and there is no way i can afford to buy in auckland, so I will just save money i make up here and then when i am ready i will buy back in my home time and go back there, but I can understand why the younger gen gets really pee'd off trying to buy in auckland.

I would be really happy if i could buy a place somewhere out of auckland and just remote into work. Until more companies look at doing this then auckland/wellington etc will have this problem

Re painting, limitations on pets and plants on the deck == Sacrifice. It's short term, build a bridge. Re Body Corp Fees - Still significantly less than the interest on the other 200-300K you would spend to buy a bigger property.

The deposit thing and restrictions on rental may apply to some but not all of those under 200K apartments, I know because I have friends who have them.

graemeh

2078 posts

Uber Geek

#869093 31-Jul-2013 09:42

jonherries:
graemeh: This is not true. Other investments do not have to pay tax on a capital gain.

I am not sure you are entirely correct:

http://www.goodreturns.co.nz/article/976485506/capital-gains-tax-the-new-zealand-case.html

This is quite a good piece on the current legisalation. IANAL, however essentially if you are buying stuff (property or shares or other financial instruments) with an intent to accrue Capital Gains your income from that is taxable.

Whether this amounts to tax avoidance or tax evasion is a pretty grey line in NZ and I think that any CGT will be merely tweaking these definitions.

HTH,

Jon

You are right, however my comment was aimed more at the whole "rental properties get special treatment" camp. This statement is totally untrue and even the IRD will admit this but nobody wants to seem to hear the truth.

As you point out, if you buy property, shares or anything else with the intent of making a profit on resale then the capital gains are taxable and the losses are tax deductible.

Strictly speaking the current situation is not taxing capital gains, it is taxing trading profits.

stevenz

2802 posts

Uber Geek

#869151 31-Jul-2013 11:00

KiwiNZ:
nathan: We should have a comprehensive capital gains tax, with no exemptions, including the family home. To discourage tax avoidance

Then income and company tax rates must drop by the equivalent amount

Capital gains tax stifles investment and will remove what little venture capital is made available in New Zealand. It also reduces fiscal growth and will reverse small gains of a CGT. The best way to fund retirement cost is economic growth, grow the economy, eliminate unemployment thus increase the tax take.

But is a CGT the lesser of two evils?

Improving the economy at all costs and to hell with the people in it looks to me to be the reason we're in this predicament in the first place. In a fair world an improving economy would lead to increased incomes for those at the bottom of the food chain, but it doesn't seem to happen, the people running the show just get nicer cars.

I've totally given up on ever owning a property, in Wellington at any rate. My kiwisaver can just sit there and pay my rent for a few years if/when I ever retire, as it stands.

@KnightNZ

1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | ... | 11