Budget 2015: Agents welcome new tax rules

Government urged to bring in tougher measures to stop money laundering through property transactions.

Real estate agents have welcomed new measures to track foreigners buying property here but say tougher moves on money laundering are needed.

Colleen Milne, Real Estate Institute chief executive, backed the two-year speculator tax and making non-resident buyers give their tax number from their home country, along with opening a New Zealand bank account.

"The announcement by the PM John Key, relating to bolstering tax rules on property transactions when an investment property is bought for the purpose of capital gains, has REINZ support. It is seen as a positive action which provides a fairer and effective tax gathering on investors who are seeking a quick gain. This is pertinent to the Auckland property market."

She said the REINZ supports initiatives to obtain identification of the buyer and seller to assist in the control of money laundering.

"This has been discussed with the industry leaders and is considered best practice."

Milne, who represents more than 13,000 agents, also wants the Budget to continue funding for healthier homes and set a health standard on rental properties.

Regulation for the property management sector has long been lobbied for by agents and she said this was another area which needed attention "to bring compliance standards similar to the real estate industry".

Further infrastructure funding was another focus.

"There is a need for government investment in infrastructure, particularly Auckland. This will assist in keeping the value of developments and affordability under control, particularly for first home buyers," she said, advocating increasing funding for special housing area projects "particularly Auckland, and other areas of need such as Christchurch, Wellington and Tasman".

Further funding for the Christchurch rebuild would be welcomed by Christchurch members, she said.

Andrew King, New Zealand Property Investors Federation executive officer, said the existing regime was adequate because people were taxed on property investments.

"The IRD have been very successful at finding people who trade in property and didn't pay tax. However we think that any extra funds should counter the wrong impression that many people have and correctly inform them when tax is payable.

"This seems fair," he said, indicating landlords hated being lobbed in with property flippers.

"An investor owns rental property to provide a home for tenants.

"A trader, or speculator if you like, buys and sells property with no tenants.

"The IRD are tracking down traders and speculators. Some of them are trying to say they are investors when they are not, but some are unaware that they are required to pay tax on their profits," King said.

"If you trade in property - some people say speculate - then you pay tax on any capital profit you make.

It doesn't matter if you only do it once and you have a regular job at the same time, if you bought and sold a property intended to make a profit, you owe tax on that profit."

"Many people are unaware of this and some will put themselves at severe financial risk by trading property unaware that they owe tax on the profit.

"An educational campaign on property taxation should be funded with some of the extra money to target residential property speculators the IRD may receive in this year's Budget."

Real estate companies have begun cracking down on money laundering themselves by agreeing to halt sales to any buyer who does not have proper identification.