One Auckland real estate agent says buyers are rushing to try and beat the Government's new foreign buying restrictions coming into force this October. File Photo / NZ Herald
One Auckland real estate agent says buyers are rushing to try and beat the Government's new foreign buying restrictions coming into force this October. File Photo / NZ Herald
Those in a rush to buy property before new restrictions come into force in October are ignorant of the current rules and will be in the IRD's sights, Prime Minister John Key says.
"The bright-line test takes away ambiguity when it comes to purchasing investment properties for that two year period. It doesn't fundamentally change the law," Mr Key said.
"If you bought a property today and it was an investment-based property, that will be on the radar screen of the IRD. So, if people think they are going to beat the rules by buying today before the bright-line test comes in, they might be in for an awfully nasty shock when they get a knock on the door from an IRD tax inspector."
Mr Key made his comments after an agent from Auckland's biggest residential real estate agency says "some groups of buyers" are trying to beat the Government's new restrictions.
An agent from Auckland's biggest residential real estate agency says "some groups of buyers" are trying to beat the Government's new restrictions on foreigners from October.
Kevin Liu of Barfoot & Thompson's Onehunga office sent a letter out to home owners in his area, asking them to get in touch if they were thinking of selling.
This is because there was steep demand from "some groups of buyers" which he said would be affected by a new law due to come into effect from October 1.
To get around new tax and banking restrictions, those buyers now wanted places, he indicated.
Liu wants to list more residential properties so he can meet that demand, which is exacerbating an already short listings supply, he said.
"At the moment, we are seeing an upward spike in demand for property as some groups of buyers trying to buy before these changes take place," he said.
That is a reference to the Taxation (Land Information and Offshore Persons Information) Bill, now before Parliament's finance and expenditure select committee.
The new law will gather information for Land Information New Zealand and Inland Revenue about offshore buyers.
Barfoot has been at the centre of Labour claims this month, after data was leaked indicating Chinese buyers were targeting Auckland.
Liu said the new proposed law was already having a big effect on the market.
"You may have heard on the news recently or read in the paper the changes which are taking place on 1 October, 2015. These are likely to have an impact on property values. The changes are outlined below:
• Requiring non-residents and New Zealanders buying and selling nay property other than their main home to provide a New Zealand IRD number. • Requiring non-residents to have a New Zealand bank account and to get a New Zealand IRD number. • Introducing a new 'bright line' test to tax gains from residential property sold within two years of purchase, unless it's the seller's main home, inherited or transferred in a relationship property settlement. • Require residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30 per cent," Liu wrote.
