The Block: Show us the numbers

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One of the best things that could happen with TV3's renovation show, The Block (besides Tyson and Rachel winning), would be to see the numbers in the deal.

Tuesday, August 7th 2012, 12:00AM 4 Comments

by The Landlord

You see, there is a view that people who invest in residential property are tax cheats.

The view, a bit like some of the outlandish stuff you see on reality TV shows, is that they quickly on-sell properties at a tidy little profit and pay no tax on that gain.

The tax law is clear. If a property, other than a taxpayer's residence or business premises, is bought with an intention to resell any resulting gain is taxable.

The tax is normal income tax because New Zealand still has no capital gains tax (although Labour and the Greens may change that).

It's little known that our tax collector, Inland Revenue, has, for years, identified property deals which should be subject to tax. The PCP, or property compliance programme, from all reports, gets a pretty good return on its investment and reaps millions of dollars in tax from profitable property deals.

It would seem to me that the four houses at the centre of The Block fall into this category.

I would like to see the financials of these deals: how much was paid for the properties, how much was spent on renovations and materials, then what they sell for. Add to that registered valuations before and after.

The Block promotes the sort of property investment that gives the sector a bad name.

There's nothing wrong with a do-up. But do it properly. Most Kiwis who invest in residential property buy and hold and don't get caught by this tax rule.

Doing a house up for a quick profit and flicking it on means a tax bill is coming. These are four deals that Inland Revenue will have no problem finding.

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