Originally Posted by
sidecar bob
I'm not concerned too much how it will affect me. I've had around a decade of intense activity that would have attracted a CGT, that activity has now tapered off & will remain somewhere down around nil for the foreseeable future, so I'm not concerned how it is going to affect me.
My concern is for the change in kiwi behaviour & lifestyle.
I can see the arse dropping out of the beach settlements & maybe a shift to large boats instead.
I also worry for people currently renting.
Landlords can't just haul money out of their arses & won't be prepared to inject some cash to top up the mortgage of a rental property out of their wages to keep the rent reasonable, as many have done in the past, in the knowledge that there is a tax free carrot waiting for them at the end, because they will now be taxed on the profit of said property.
Rents will definitely rise & while I'm sure it will turn a few tenants into home owners in the short term, the long term will be a bit grim if you aren't a home owner.
Also, for landlords that have done a monthly top up from their income over the years, there had better be an accounting system in the CGT maths that takes their input off, as that needs to come off the taxable profit, as it was taxed income before it went to propping up a tenant & isint a gain, as it was a landlord contribution.
Yes, I have done that to make sure my tenants pay market rent for a property that had decent capital gain and a fairly hefty mortgage.
I don't know anyone with a residential investment that doesn't use their own wages to help pay it off. In my case it amounted to more than the rents, and that's pretty common.
Add all of the other costs involved in house ownership, (a lot of it bureaucratic compliance costs) and the annual costs are often tens of thousands a year more than the rent covers. That means extra work, lots of it, for fucking years. The "profit" is deferred until you either pay off the mortgage or sell it. And if you take inflation out of that profit on the sale it's not really much of an investment, for me just barely better than cash in the bank over the same time frame. Just.
Not that they'll allow depreciation based on inflation for a CGT, of course, for the same reason investors will get out of the business if and when they introduce it: take out the tax on inflation and it's not worth doing it.
But like you it doesn't worry me any more. I got sick of not only Working For Everyone Else's Family but then being blamed for the need to do so in the first place, so I sold the last residential investment last year. Funny you should mention boats, I blew the resulting funds on one. Best investment I ever made.
Nobody ever seems to learn about how badly governments screw the taxpayer, there isn't a savings nest egg or hard earned investment that isn't targeted, simply because it's there, and they can. Kiwisaver? I was hopeful it might work to encourage saving, reducing the need for subsidies in retirement, but as the quantity of savings has grown successive governments haven't been able to resist the temptation to raid it to buy votes. They raided EQC investments. Gone. Happens every time a savings scheme reached a useful size: it's plundered to buy votes. This time it's a coordinated attack on all of them, property, farms, kiwisaver, (again), business investment, anything anyone's worked to accumulate for any reason whatsoever is being stripped. Because, apparently, it's only fair.
Go soothingly on the grease mud, as there lurks the skid demon
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