Policy king hit
Investors have recently been dealt a double whammy with the concurrent release of the Tax Working Group’s recommendations on capital gains and the Healthy Homes minimum standards.
Monday, April 8th 2019, 6:43AM 
1 Comment
by The Landlord
In this world nothing can be said to be certain, except death and taxes, according to Benjamin Franklin.
And, in New Zealand of late, it seems that nothing can be certain except talk of tax – specifically the spectre of a capital gains tax.
Since the public release of the Tax Working Group’s (TWG) final report, it feels there has been talk of little else.
For property investors, the TWG’s report confirms their fears that a Capital Gains Tax (CGT) on rental properties is now firmly on the cards.
Yet the waiting game continues as the Government considers exactly what it plans to adopt.
In this month’s issue of NZ Property Investor magazine, we take a look at what the report says, what people have to say about it and what it could mean for investors.
No-one was surprised that the TWG’s final report recommended that income from capital gains should be taxed more. But the extent of the recommendations around a CGT did shock.
Most of the 11 member group support the introduction of a CGT on rental properties, land and buildings, business assets, intangible property and shares.
Just three of the group think the tax should be confined to the sale of residential rental properties.
This is a far more comprehensive sweep of capital gains producing assets than was expected.
And, as such, it has led to a high level of fevered debate. The fact that small businesses and farms, in particular, are under threat has prompted widespread outrage.
To read more about our take on the TWG’s proposals, along with our rundown on the new Healthy Homes minimum standards, click here to get the digital issue of NZ Property Investor magazine.
Subscribe to NZ Property Investor magazine here to get great stories like this delivered to your mailbox every month.
| « Realism needed in Auckland market | Capital gains battle heats up » |
Special Offers
Comments from our readers
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
However as soon as there are exemptions for various activities and certain assets it become subject to accusations of social engineering, political expediency, and the perception of being an an envy tax.
Residential property investors are firmly in the sights of this tax. Yet they are carrying on a perfectly legal small business, providing a service to willing customers at a competitive market price.
Strangely, our society does not despise motel owners who rent out accommodation by the night or by the week, but appears to detest and dislike landlords who rent out accommodation by the month or by the year.
Thus we can only assume that there is a political agenda involved within the proposals aimed at penalising the frugal, the hardworking and the aspirational.
It is generally held by knowledgeable economists that home owner-occupiers who have largely paid off their house mortgages are the most advantaged group under the current tax system, paying no tax on the value of their own housing costs. So why are they specifically exempted from the CGT proposals?
There can only be one answer - because it it politically expedient to do so. This immediately and totally undermines the whole 'fairness' concept of the CGT proposition.