Govt mulling investment property probe

Photo / Nick Reed

Greater resources for the taxman to investigate property deals are being considered as part of this year's budget, Finance Minister Bill English says.

Mr English told reporters this morning that he did not agree with the Reserve Bank's recent comment that property speculation was pushing up house prices in Auckland.

But he said there was an ongoing discussion about whether the Inland Revenue Department could be doing more to enforce current laws around property speculation.

There was already a tax in place for people who bought property with the intention of reselling it, Mr English said.

And with real estate agents and buyers reporting high levels of trading activity in Auckland, "there is a question of whether that should give rise to further enforcement activity".

The IRD could not advise on how much income greater enforcement could generate for Government.

The Government's focus was instead on what resources IRD needed to investigate property trading more closely.

"In the past we've put further resource in for more investigation into transactions and we're in the context of the budget having further discussions about that now," Mr English said.

Asked whether there were any other tax measures which could be introduced for investors, Mr English said the past two elections had shown there was little support for a capital gains tax.

Public approval was needed before any changes to taxation on housing were introduced, he said.

"The lesson, particularly out of the last election campaign, is that the public do need to support changes in taxation for housing because it is for by far the majority of New Zealanders their main asset."

Labour's finance spokesman Grant Robertson said only considering politically popular measures for housing was an irresponsible approach.

"I think it's actually up to the Government to look at how it can provide the best incentives and disincentives on investment and the economy. Simply washing their hands around tax and tax measures in unacceptable."

Mr Robertson supported moves to give greater powers to the IRD to enforce tax rules around property ownership, but he also felt these rules needed to be tighter in order to improve access to housing.