Tax will be easier to collect from non-residents buying then on-selling a New Zealand property within two years and residential listings will rise sharply, bank economists says.
The ASB's Jane Turner has this morning released a commentary on the Government's surprise pre-Budget tax announcement yesterday on residential property purchases, ushering in a tougher capital gains tax if people sell within two years of purchase.
"In our view, the most significant implication of the announcement is requiring foreign investors to register with the IRD and opening an NZ bank account. This will make it easier to collect tax owing from foreign investors who made capital gains investing in the NZ property market," Turner said.
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"It will also bring more visibility to the extent of foreign investment in NZ's property market. Currently NZ lacks good quality data on the purchase of homes by NZ investors and foreign investors. As a result, it is actually fairly difficult to gauge how effective these new rules will be. However, going forward, NZ policy makers will be more informed on the impact any new rules and requirements will have," she said.