APIA Blog

RSS Feed

CGT - Lunacy much?

Tuesday, April 15, 2014

Capital gains tax

Just this Sunday, Labour's David Cunliffe was on Q+A lambasting a tax regime that hands out tax free capital gains to property speculators as nothing but pure lunacy.  And he would not be wrong. 

Problem is, he is wrong.  In a press release issued yesterday, the New Zealand Property Investors' Federation Executive Officer, Andrew King, rightly pointed out, 'Those who buy and sell property are already taxed on the income from this activity,' whereas the majority of rental property owners are investors not speculators - a distinction that Mr Cunliffe's Labour Party seems to have failed to grasp if their leader's frequent interchange of the two labels is anything to go by.

Property speculators are those who derive a living (i.e. an income) out of selling appreciated assets (i.e. properties) which had increased in capital value.  They are driven by capital gains which are already captured by our income tax regime each time they are made.  In essence, New Zealand already has a capital gains tax in all but name.  

Property investors are driven by reasons that are far more diverse:

  • Providing a passive income stream to supplement our retirement;

  • To have total control over the value of our investments (rather than investing in shares, currencies or finance companies the value of which investors cannot affect); 

  • To invest in an industry (accommodation supply) that continues to have strong demand (housing); 

While any incidental capital gains made throughout would not be un-welcomed, they are only illusionary (because they will be exhausted the moment investors buy back into the market).  

'So,' you wonder, 'where does a CGT leave investors?'  But perhaps more pressingly for me, 'Where does a CGT leave tenants?'  With or without a CGT, demands on the Auckland housing market will always make properties a realistic prospect for investors.  A tax raising scheme designed to dis-incentivise investors will only result in the increased costs be passed on to the tenants who, ironically, are the ordinary Kiwis Mr Cunliffe set out to protect.  




Recent Posts


Tags

HHS management legal clnz negotiation buyer's agent watercare partners trademe covid-19 will property apprentice property management income heating maintenance buying winz cash-flow auckland relationship market rent minor dwelling rtaa2020 landlord Kris Pedersen Mortgages and Insurance Jeff Bezos rent arrears RBNZ Market report Sponsored post trespass meth Landlording productivity television off the plan asbestos first home buying warm up new zealand data security sale and purchase CCC housing bubble structure Must know principal and interest advice return business finance tenancy tribunal market wealth creation HHGA CoreLogic insurance parry v inglis HSWA Holler buying rules reserve bank property cycle capital gain sublease skill shortage recycling equity fixed-term tenancy anti-social behaviour Property (Relationships) Act kiwibuild rent increase DTI worksafe Question and answer termination housing affordability tenant mortgage debt enforcement Guest blog airbnb rental wof tenancy issues TCIT insulation ird Level 4 robert kiyosaki opes partners warren buffett interest only boarding house tax anz Case study scotney williams Investor story financial advisers act Tribunal case study shower dome gluckman report investor privacy house prices rental market bond form education building early termination cgt cat government meth contamination subdivision re agent beginner investor How to water bill mindset lvr equity election2020 heater property value Q&A LIM development personal growth letting RTAA 2019 commerce commission ring-fencing initio nzpif yield sale and purchas property speculator tenancy services positive cash flow Gluckman bond extractor fan investment strategy auckland council wins bad tenant holiday house letting fee khh election 2017 p lab twg report smoke alarm interest rates Must knows property maintenance renovation Investment tip Editor's Choice ventilation ocr Standards New Zealand unitary plan banking rta reform rta trust damage inspection ask an expert rent short-term rental barfoot and thompson

Archive

Introducing Our Partners
Principal Sponsor - Kris Pedersen Mortgages & Insurance logo Gold Sponsor - Barfoot & Thompson logo Gold Sponsor - CoreLogic logo Property Apprentice logo The Insulation Warehouse logo The Renovation Team logo The New Zealand Property Investors' Federation logo
09 360 2376
info@apia.org.nz

The Tenancy Practice Service and TPS Credit Control work closely with the Auckland Property Investors' Association. Our vision of bringing helpful resources, documents and high quality services to Auckland Property Investors and Property Managers is shared by APIA, so its a partnership that works well. 

The Auckland Property Investors' Association is a great organisation for those who want access to advice and information from a range of industry experts and partners. 



Mathieu Holt- Managing Director, The Tenancy Practice Service & TPS Credit Control
Through the Association I found the channels and methods to fund the purchase of property I never dreamed about. Grant Brown

All round it has been one of those things Neil and I felt was really worthwhile belonging to. We have learned so much it has just built our confidence in what we are doing.

Janice Bieleski
I read two articles in the monthly magazine that saved me over $5,000. That is my membership fee for the next 26 years and I am sure I will learn a whole lot more! John Duncan
Fantastic organisation. The networking opportunities are brilliant and provide us with information and opportunities that cannot be obtained anywhere else. We learn something new at every meeting and we've been in this game for nearly 20 years. Pauline and Gyanen Kumar

I find the information obtained from various APIA meetings very useful in guiding my own property investment and rental management.  I also enjoy the networking opportunities with like-minded investors.  I am inspired by other investors’ success and find the more experiences and knowledge that I share with others, the more confident I become.  

Thanks to all APIA event organizers and administrators for your brilliant work. 

Stella Shao

I like talking to people and learning from their experience because it gives me the confidence to invest well. I think it is a knowledge thing. I now know I am doing things the right way.

Stephen Weatherall

My APIA membership has become a total success.

Every time I attend a monthly or regional meeting I come away with so many useful and positive tips that have added value to my property investments and management.

Not only that, the website is a great place for practical advice and useful information. It has now evolved into an important resource for my business.

Talk about value for money! The discounts I have been getting at Bunnings when I present my APIA membership card have more than paid for my annual subscription!

Tim Duffett, Plan A Investments Limited