Capital Gains Tax finally on a major party's agenda

[BoristheBiter]

For any of this to work they would have to change the trust laws.
All you need to do is lock it up in a trust and you will not pay CGT as you don't own it the trust does.

Just like if you own a business, the business owns everything so pays for everything so pays less company tax because of low profits, you don't need much as the company pays for everything so you pay yourself a small wage and in doing so pay less tax.

See us rich pricks already know how not to pay tax so won't make a damned bit of difference all this will do is target middle income family's that are supposed to be labour voters anyway.

[yachtie10]

For any of this to work they would have to change the trust laws.
All you need to do is lock it up in a trust and you will not pay CGT as you don't own it the trust does.

Just like if you own a business, the business owns everything so pays for everything so pays less company tax because of low profits, you don't need much as the company pays for everything so you pay yourself a small wage and in doing so pay less tax.

See us rich pricks already know how not to pay tax so won't make a damned bit of difference all this will do is target middle income family's that are supposed to be labour voters anyway.

wouldnt the trust pay the CGT?

[BoristheBiter]

wouldnt the trust pay the CGT?

I depends on how it is set up.
It is like a company and the tax is done on a yearly basis so depending if you leave the money in you most likely will. if you pay out there is no money left in so no tax.
This is why they have closed the loop hole in LAQC's.

[neels]

This is why they have closed the loop hole in LAQC's.

And replaced them with LTC's, same net effect as LAQC unless you've split your loss making and profit making assets for tax purposes, more window dressing for the voters.

There seems to be a fundamental confusion between rental properties and CGT. Tax would only be paid if the property was sold, so it's only the speculators buying properties on interest only mortgages to flick on, or doing up and selling that are going to be hurt by this.

Let's not forget that it suits the govt for there to be private landlords. It costs them around $2.5k in lost tax for a flat I own (well the bank does), the capital cost for the govt to own it would be around $10k a year plus rates and maintenance, plus the cost of someone to administer it whereas my time is free.

If it became too unpalatable to own rental properties the real outcome would be either homeless people, or property prices dropping so renters could afford to buy, would be a real vote winner for a govt if they bought in a policy that either upped rents or shaved property values by 20%.

[paturoa]

So for those of you who are gullable enough to subrscribe to Liarbore's politics of evny.... (refer 7 deadly sins), fuxk off and grow a brain.

New or increased taxes (almost) never make any real difference to the issue they are targetted at. People simply find another method to get around the issue, or say fucxk you and carry on, with the net result being a shift of burden or taking a further hit in their disposable incomes. One of the few exceptions are reductions in tobacco consumption.

Liarbore will have you believe that it will "fix" the afforability of residential housing so more people can own their own homes. Oh realy? How? Show me proof of where this has worked elsewhere, cos there is a lot of evidence already referred to and published that shows otherwise.

Here is what would happen, the prices would stay roughly the same and middle NZ'ers will see more of their cash being paid in tax. Those that are investing in these properties will hold onto them longer, reducing the supply. Demand is growing so .....

I do beileve that it would divert a small amount of money to invest potentially productive investment types but, call me a sckeptic, as this money is from loans anyway.

Also from the portofolio of short sighted politics in unzud. Why the stick? Would not a carrot be a better idea?

[schrodingers cat]

Re: RICH PRICKS
These people take RISKS
As such they deserve REWARDS
Regulation serves to whack the ones who take stupid risks with other peoples money.

There was an example earlier of guy mentioned who buys houses cheap, tidies them up and flicks them off for a 'spectacular' profit. (PS how do you know what HIS nett profit is? Do you even know what NETT profit is?)

He is WORKING.
He is USING HIS SKILLS and taking a measured RISK. He deserves a REWARD
He is helping the economy go round and round to the benefit of others.

Heaven forbid should he decide to create a JOB for someone to take no RISK but USE THEIR SKILLS to get a lesser REWARD by WORKING

A capital gains tax needs a debate independent of the current announcement.
This is the 'battle for South Auckland' where;

Its a continuation of Labour's "Rich bastard" philosophy. Kill the flowers to feed the weeds...

It is time that all governments stopped being the countries largest employer (specifically all the indirect employment).

It is time people stopped expecting the 'Government' to fix all their ills.

Want a better life - go and make one for yourself.
Try WORK. Try RISK. Experience REWARD
Disclaimer - Reward not guaranteed

[mashman]

So you're against the higher tax rate for high earners then?

I reckon they could come up with a better system if they really wanted to . But alas, it seems to be the best they have . At the end of the day it's all about paying the bill eh? Here or abroad. We need a finite amount of money to keep this country "going". Actually, at this point in time I'll stop () and just concede that the current system isn't perfect, and that there isn't a perfect system? We can all agree that there isn't a perfect system? What's the next best thing? I'd go for removing money entirely... but ...

... if there is going to be a system where money is the "cure" to whatever "problem" (drugs, leaky homes, finance company buyouts, insurance company bailouts etc...) it is being raised for , then a proportional distribution and taxation of the country's finances is more beneficial to the country, than a small number of "individuals" who live by the hide it before they see it approach... and then call foul when something like the CGT is tabled. There is irony there too... I'm pretty sure of it ... so to answer your question, yes and no

So you agree with a flat tax regime then?

. If that's the way you choose to look at my suggesstion, and you agree that the flat tax rate is 100%, then yes

[SPman]

Whinge whinge moan moan bludgers Liarbour Helen whinge moan not fair I work hard bludgers get all my money whinge it's all my money whinge why should I pay for anything moan complain shout whinge etc etc etc......

[FROSTY:Me]

How I see this is . Why on earth would all those currently renting houses out want to do so under this proposed law? There would be better investments than a house that some lowlife could turn into a crackhouse etc

[oneofsix]

How I see this is . Why on earth would all those currently renting houses out want to do so under this proposed law? There would be better investments than a house that some lowlife could turn into a crackhouse etc

so are you saying it will drive down house prices as all those that invested in a second, third or more houses as rentals sell out of the market, take their profits and run?

[rainman]

How I see this is . Why on earth would all those currently renting houses out want to do so under this proposed law? There would be better investments than a house that some lowlife could turn into a crackhouse etc

Well it's not guaranteed that the tenants will be crackheads y'know. You do get some choice over who you do business with.

I'm seriously looking at the financials of taking on a rental property at the moment. Yes, even knowing there may be CGT when I sell up again, and even in the middle of what I know to be a major and sustained recession (depression?). And knowing LAQCs are basically dead. There are still circumstances where being a landlord can make sense - it's a business that has existed for centuries, before all the tax trickery we have today.

This option is a close-run thing, and may not happen, but CGT wouldn't be a dealbreaker.

[Winston001]

so are you saying it will drive down house prices as all those that invested in a second, third or more houses as rentals sell out of the market, take their profits and run?

The very few investors who will be scared off by a CGT are mums and dads who own one rental house.

Anyone who owns two or more houses does so because that is their longterm investment plan. Selling out now makes no sense at all. The serious landlord with half a dozen properties wants those for income - any capital gain is good luck and only arrives in cash after they die.

Well it's not guaranteed that the tenants will be crackheads y'know. You do get some choice over who you do business with.

I'm seriously looking at the financials of taking on a rental property at the moment. Yes, even knowing there may be CGT when I sell up again, and even in the middle of what I know to be a major and sustained recession (depression?). And knowing LAQCs are basically dead. There are still circumstances where being a landlord can make sense - it's a business that has existed for centuries, before all the tax trickery we have today.

This option is a close-run thing, and may not happen, but CGT wouldn't be a dealbreaker.

Yep. Over the centuries owning property which other people pay off for you has been the simple road to financial security. Not always easy, unexciting, but solid.

As for the recession: buy in gloom, prosper in boom. Seen three cycles in my working lifetime. It works. But location is important.

[FROSTY:Me]

Well it's not guaranteed that the tenants will be crackheads y'know. You do get some choice over who you do business with.

I'm seriously looking at the financials of taking on a rental property at the moment. Yes, even knowing there may be CGT when I sell up again, and even in the middle of what I know to be a major and sustained recession (depression?). And knowing LAQCs are basically dead. There are still circumstances where being a landlord can make sense - it's a business that has existed for centuries, before all the tax trickery we have today.

This option is a close-run thing, and may not happen, but CGT wouldn't be a dealbreaker.

Mon gimme a yeodle -i've been a landlord for a few years.sometimes you wonder why ya bother

[slowpoke]

So does anyone actually know what problem a CGT is supposed to fix?

From folks on here I'm hearing it's targeting untaxed income.

From my local labour pollie I'm hearing it's supposed to:
1. make housing more affordable
2. stop housing price bubbles
3. help us retain national assets
4. align us with most other developed nations

Commonsense tells me that "most other nations" with a CGT also experienced massive housing bubbles pre-GFC. My own experience in Western Australia where property speculation was rife even with a heinous stamp duty and a CGT tells me the smaller property bubble, lower price speculation is rubbish. A couple of years ago they had the highest capital city property prices in Australia, outstripping Sydney.

Housing is driven by supply and demand. Remove investors and there may be a small blip but it'll shortly pass then back to situation normal, except the Government is better off.....and there's another level of bureaucracy to deal with. And good luck finding an affordable rental.

As for retaining assets, what's the go with selling them in the first place? Why sell something that can make you money? Sure a decent wad of cash helps balance the books now but long term it's a drop in the ocean compared to the income stream that would come from retaining them. The whole ethos of asset sales has got me fucked, especially when the only entities capable of buying the assets are foreign corporations.

As someone previously mentioned, property is not a tax free investment. You pay tax on your earnings before buying the property, then assume risk when you purchase the property, make lifestyle concessions to obtain/retain the property, and send a fair bit of the rental income out into the community via property management, cleaning and maintenance fees, not to mention the actual building of investment type properties.

So a CGT doesn't just strip investors of cash pushing them out of the market, it flows on to reduced income streams for builders, cleaners, lawn mowers, handy men, real estate firms etc etc. So what's it s'posed to do again?

Oh that's right, get folks to invest in the sharemarket, and 'cos the average investor knows even less about shares than they do about property they'll give it to those good solid finance companies we keep seeing on the front page of the newspaper and court reports. Nice one

[Usarka]

So a CGT doesn't just strip investors of cash pushing them out of the market, it flows on to reduced income streams for builders, cleaners, lawn mowers, handy men, real estate firms etc etc. So what's it s'posed to do again?

How does it push them out of the market?

Instead of making $100,000 profit they only make $85,000? Oh noes. Put the rent up.


I'll bet that the Nats brains trust think that CGT is a good idea. But not a good idea to win them the election. My bet - National will win this election but will now CGT is firmly on the table they'll bring it in in a couple of years themselves. Then everyone here will then think it's an awesome idea.

Oh that's right, get folks to invest in the sharemarket, and 'cos the average investor knows even less about shares than they do about property they'll give it to those good solid finance companies we keep seeing on the front page of the newspaper and court reports. Nice one

Sale of shares included in the tax.