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  Reply # 1135182 24-Sep-2014 07:40
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Geektastic:
sir1963:
Regs:
mattwnz:
Geektastic: 

I will also add that there are many people in NZ, judging from newspaper comments etc, who appear convinced a CGT will be some sort of magic bullet for housing prices..


Yes of course  CGT will not affect house prices one little bit. That was just politcal spin to try and make it an emotional decision. The problem with house prices is supply of land, complaince costs, building costs, building material monopolies/duopolies , overpriced labour and shoddy workmanship which often  means things need doing multiple times etc. So it is a range of different things


you missed one of the biggest factors, imo, in your list of reasons for unaffordability.... "keeping up with the joneses".  Far too many people keep 'upgrading' their houses, and moving neighbourhoods, as income rises (or not).


The other big issue is the costs of buying and selling.

A friend in the UK who sold his house paid 0.75% to the real-estate agent, and that included advertising.

Buy a house here and you need to 6% to cover them and the lawyers fees when you sell.

Realestate fees are a blatant rip off, out of the 3 "professionals" involved (lawyers, Building inspectors, realestate agents) the real-estate agent make the most money and yet is the least qualified.


I can confirm that.

When we sold our flat in the UK we sold it for the equivalent (at the exchange rate of the time) of $700,000 and paid the equivalent of $2000 in agents and solicitors fees, including all the advertising costs.

When we sold our first NZ house for $650,000 we paid over $25,000 in fees!! At that rate an agent only need sell 4 houses a year to make a decent income.

Considering most agents here appear to be numpties who add little or no value to the process it astonishes me that they have the brass neck to charge so much.


The Real estate company gets 50%, the agent 50%.

We had our property up for a private sale. An overseas couple who rented in the area saw this and went to a real-estate agent.
The agent asked if they could show them through the house, "OK", then I was told I would have to sign an agreement, "No"
They then erase everything about fees and replaced with "Negotiable" and said this covers their liability (i.e. breaking something), so "OK"
They came with an offer, and we negotiated the price.
At then end we made an agreement, then I said "Fees, $1000 should cover it, thats about $400/hr", they said they could not do it for less than $10,000.
"Bye" , they got nothing.

Sold it through a different agent for $5000 inc GST etc.

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  Reply # 1135187 24-Sep-2014 07:51
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This highlights the rich poor gap in this small nation.

The popular real estate agents earn millions. The not popular ones struggle to pay their own rent.

Oh well laissez faire

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  Reply # 1135188 24-Sep-2014 07:52
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That's why I say removing ways of tax avoidance is the only way

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  Reply # 1135296 24-Sep-2014 09:04
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sir1963:
bazzer:
sir1963:
rayonline: Ok then on that argument why are shares not exempt ...



Well my shares have increased in value over the years and I have not had to pay any tax on that capital gain, I have paid taxes on the dividends.

But then if I own a art or jewellery or collectable cars, etc etc etc there is no capital gains taxes on those either.

Have you sold/crystallised the gains? Are you a trader?


No and No.

However not being a trader means I don't pay capital gains on shares, just as I don't pay on increase capital value on jewellery, stamps, collectables,cars, etc etc etc.

Then I don't understand your point about not paying CGT on your shares? If you haven't sold them, why would you have to? That's like saying (assuming a CGT on property) that my properties have increased in value but I haven't paid tax on any of those gains. Well, what I didn't mention is that I haven't sold any of them, is that important?

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  Reply # 1135345 24-Sep-2014 10:20
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Well technically, the best capital gains systems are accrual based, where any gain on value during the year is taxed, even if you haven't sold the item

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  Reply # 1136388 24-Sep-2014 11:34
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Tzoi: Well technically, the best capital gains systems are accrual based, where any gain on value during the year is taxed, even if you haven't sold the item

Maybe, although not without its problems, but no one has suggested that for NZ, have they?

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  Reply # 1136394 24-Sep-2014 11:40
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How do you know it's gained value? It's all paper value, the true value is when the buyer hand s in the cash.

And can I depreciate my Audi every year too? If so I'd vouch for it.

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  Reply # 1136423 24-Sep-2014 12:33
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joker97: This highlights the rich poor gap in this small nation.

The popular real estate agents earn millions. The not popular ones struggle to pay their own rent.

Oh well laissez faire


There may also be a difference in competence and ability between the two types...





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  Reply # 1136424 24-Sep-2014 12:34
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joker97: How do you know it's gained value? It's all paper value, the true value is when the buyer hand s in the cash.

And can I depreciate my Audi every year too? If so I'd vouch for it.


Of course, if your Audi is a business asset. I depreciate our lawnmower every year!





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  Reply # 1136429 24-Sep-2014 12:35
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Tzoi: Well technically, the best capital gains systems are accrual based, where any gain on value during the year is taxed, even if you haven't sold the item


How do you pay the tax if you have no income then?





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  Reply # 1136432 24-Sep-2014 12:38
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But property is not a business asset, rather a personal one. If you want me to pay tax on paper value then I should be able to depreciate my Audi lawnmower for personal use

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  Reply # 1136475 24-Sep-2014 13:03
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joker97: But property is not a business asset, rather a personal one. If you want me to pay tax on paper value then I should be able to depreciate my Audi lawnmower for personal use

Only if the CGT applies to every asset you own. Otherwise which category to pick and choose?

If it's all property ("always" increasing in value) and cars ("always" decreasing in value) then the tax rate would be set such that the overall take is the same, I'd have thought. Any losses could be carried forward to offset any gains in future periods.

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  Reply # 1136513 24-Sep-2014 13:42
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Capital gains is just another way that international banks hoover up a nations money

A) the person who takes the mortgage pays interest to the banks and up the line money goes
B) the person who sold and made some money pays CGT to government who in turn pay interest on their loans to international bank

If CGT didnt exist the money would be used by the vendor to either 

a) pay off their own mortgage
b) save
c) spend in the economy  

None of these things benefits the bank as much as interest payments and loans. They want you to not be freehold and reliant on their loans (and interest that comes with it).   Meanwhile you've got large corporates posting net after tax profits in the 100 million to 1-2 billion $$ range at the expense of the environment and the underpaid nz worker. CGT only proper application should be on those that turnover many houses per year (ie large developers) not mum and dad kiwis trying to get ahead.

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  Reply # 1136712 24-Sep-2014 16:41
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d) Buy another house while getting a low interest loan increasing private debt, discouraging investment in jobs that employ people, and adding to the prices of houses

A second home serves no purpose other than a financial one, people struggle to accept that, not really sure why.

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  Reply # 1136740 24-Sep-2014 17:03
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bazzer:
Tzoi: Well technically, the best capital gains systems are accrual based, where any gain on value during the year is taxed, even if you haven't sold the item

Maybe, although not without its problems, but no one has suggested that for NZ, have they?


Most reports dismiss it almost immediately, while acknowledging that it would be the best possible method. The administrative costs of such a system are too high.

joker97: How do you know it's gained value? It's all paper value, the true value is when the buyer hand s in the cash.

And can I depreciate my Audi every year too? If so I'd vouch for it.


Yearly valuations generally are suggested which is why it would result in high administrative costs. Though CG on shares is easy to find out and the local authorities value property anyway so it might not be as difficult as imagined. Gain in paper value is still gain in value, you just don't see it until you realise it. At which point there would be a modification for the accumulated tax you'd paid on the gain already, similar as to what there is for depreciated assets that are sold.

Not technically 'depreciation', it would be a 'capital loss'. Would depend on the capital gains tax system when it is implemented - does it include personal use assets. At any rate, that loss would only be able to be set off against capital gains, not against your regular income.

Geektastic:
Tzoi: Well technically, the best capital gains systems are accrual based, where any gain on value during the year is taxed, even if you haven't sold the item


How do you pay the tax if you have no income then?


Another problem with an accrual basis - people won't really have money set aside for this sort of tax which would surprise them at the end of the tax year. Another reason why it hasn't been implemented. Accrual basis CGT is mostly hypothetical based on Henry Simon's definition of income - amount consumed plus gain in personal wealth.

heylinb4nz: Capital gains is just another way that international banks hoover up a nations money

A) the person who takes the mortgage pays interest to the banks and up the line money goes
B) the person who sold and made some money pays CGT to government who in turn pay interest on their loans to international bank

If CGT didnt exist the money would be used by the vendor to either 

a) pay off their own mortgage
b) save
c) spend in the economy  

None of these things benefits the bank as much as interest payments and loans. They want you to not be freehold and reliant on their loans (and interest that comes with it).   Meanwhile you've got large corporates posting net after tax profits in the 100 million to 1-2 billion $$ range at the expense of the environment and the underpaid nz worker. CGT only proper application should be on those that turnover many houses per year (ie large developers) not mum and dad kiwis trying to get ahead.


A capital gains tax in NZ wouldn't apply to family homes because too many people would get pissed off about it. I wrote a paper about how family homes should be treated under a capital gains tax in New Zealand recently.

The environment and wages don't really have much to do with a CGT... that's a rather farfetched argument you have.

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