KEY POINTS:
Here is an earlier selection of Your Views:
Bel (Auckland)
The "no capital gains tax" is exactly why the housing prices are so high, certain people with spare money just use it to buy *cheap* properties to rent out, and claim a income tax deduction, and/or sell later for their own gains or retirement. It may also include some ruling for their holiday or 2nd homes. The richer they are the more properties they seem to obtain. It's a greedy concept and severely prevents other people from entering the primary housing market.Maybe the people who make the decisions about the countrys' capital gains tax ruling are partaking in this "rental or property investment without taxes Utopia", are too unbiased about the ruling! I very happily own one house and one lovely caravan for my holidays :)
Rob (ChCh)
As the owner of rental property I have no problem at all with a capital gains tax.If I have an increase in my pay I pay extra tax so why should I not pay the real realised gains on any property that I might sell?
Joseph Mascarenhas
It would be sensible to have a capital gains tax on sale of property, especially investment property.With the current Govt. laws, the rich keep getting richer and the middle class are the ones paying the tax and keeping this country going.The rich with their investment properties, pay no or little tax on their salary income and this helps them to keep buying more properties. The middle class and first home buyers cannot claim deductions and have to pay their full tax on salary.This encourages people to speculate in properties and not work.Currently hard work gets taxed and speculation is free from tax!
Dr Paul property speculator
Cullen is shooting himeself in the foot. Too many people in NZ have properties. Why should we get the blame for inadequate social policies? I believe someone sold off the NZ housing stock in the 1990's and people like myself bought them; torn them down and put 2 townhouses on them. Housing is driven by supply and demand. Why does the govt continue to allow too many migrants to come to NZ and they don't have to even live here and buy property. Govt spending is also to blame for too much spending and causing inflation. Taxing the rich does not help we have our money offshore. I would cut benefits, cut govt spending, reduce health spending, education, unemployment and sickness benefits, military defence reduce infracture spending. Inflation along with property prices would fall.
Sweetie, North Shore
A stamp duty on investment property only may be more effective. The IRD already taxes income made from property trading. Perhaps they need to be more riggerous in pursuing that.
JP leaving NZ
The government obviously has their own agendas. The governments schemes to help housing affordability (e.g. Kiwi saver, welcome home) will clearly do nothing but give people more money to throw at the housing market, making the problem worse. I have not heard the government produce any reasons for not wanting a capital gains tax? The government should be held accountable, their lack of action on this matter is bordering on criminal neglect.
Neil (Auckland)
As a Scottish immigrant who has five houses and who has tripled his money in the last five years, you don't mind if I have a belly-laugh at all the losers hoping to gloat if a crash in the market comes. Dream on boys. Mind you, as I borrow my money overseas, I am hoping that it does, then I can clean up in this banana republic even more. Would work wonders for my yields as well by forcing rents up - a toast to Mr. Bollard.
Frank Collingwood
Property prices in Australia are at a realistic level, and decent housing is affordable. There is a good reason for this - not only does Australia have a sane immigration policy, but the Australians also do not allow non-residents to purchase property purely for rental or speculation purposes. Here, all we get is interest rate rises, further pushing home ownership out of the reach of the average Joe. Another example of how the Australians approach problems on several levels is the way in which boy racers are controlled. In Victoria, Newly licensed drivers, or probationary drivers are permitted a blood alcohol level of 0.0 per cent, are not permitted to drive high powered vehicles, and must display their "P" plates at all times when driving, and are not permitted to use mobile phones at all while driving (All other drivers are not permitted to use hand-held mobile phones). Of course, regulations such as these are pointless if not enforced, however, infringers have the book the thrown at them. It seems to be an excellent deterrent to antisocial behaviour on the roads. Here, we get some half-baked scheme to make third party insurance compulsory. In short, the Australians realise that most problems require more than one measure to keep them in check. Isn't it time we stopped being blinded by the not-invented-here syndrome and start learning lessons from other countries where the systems in place work?
Jamie (Auckland)
There are only two ways to decrease the price in a market - increase supply, or decrease demand. It's hard to increase supply to match demand, so it's better to find ways to decrease demand. There are 2 easy ways to do this. The first is to restrict who can buy property. It seems that a number of houses are being bought by foreign investors who are just looking to make a quick buck. The Government should limit residential land purchases to those who have resident status, so that it's fairer for those of us who actually live here.
The second is to remove (or reduce) the offset of rental losses against personal income. This will result in fewer properties being bought for rental, and more available for buyers.
DG
Ignore the politicians and all the those petty whiners. Just go ahead and do it, Alan.
Jack Soo
The tax is real simple. Rental losses cannot be offset against other taxable income during the tax year. Rental losses should be carried forward to offset any future rental income. This clearly prevents landlords to incur significant amount of bank interests, depreciation and maintenance costs, convert the rental income into losses and use such losses against other income at the top of the tax slice. When the rental property is sold, there should be capital gains tax. In some other countries, they call it real property gains tax. The first property that is used for owner residence should be exempted from capital gains tax. It has been proven that capital gains tax will cushion substantial speculation in property investments, hence will slow the down rising prices.
Hugh
A capital gains tax tends to encourage 'investment' in one's dwelling and hasn't curbed increasing house prices. Just look at Australia! The real issue is the RBNZ was very slow to start raising the OCR, particularly given the proportion of fixed rate loans, and has been inconsistent in its policy statements and now wants to blame others. Don't they believe in markets? Or is it just the housing market they don't believe in? It seems so! All house sales data in NZ is provided to IRD which could easily look for trading in property and apply the law as it currently exists. Is a buy-and-hold property investment strategy any different to getting a loan and buying shares and earning dividends and share price appreciation? Recent articles in the NZ Herald confirm increasing demand for housing as the population rises and average household size decreases. Someone has to fund this housing stock. Government's response should be actively reducing the costs of building to increase supply, however the opposite has happened. Leaky house - look at a developer, not an owner builder which used to be a path to more cost effective home ownership. And which has been legislated against?
Adrian
The real answer to slowing down the property investment market lies in stopping the tax losses from property investments being claimable / offset against other income streams and not allowing the reduction in PAYE rates to cover losses from investment properties. This would make these property investments have to stand alone and not be propped up by tax losses or tax refunds for cash via PAYE. Like any business investment properties should generate sufficient income to be viable and not propped up by taxes. This move would result in an increase in the tax take which will increase the budget surplus and please Mr Cullen.
Tony
A house sales tax or stamp duty will do nothing for house affordability. It will simply make the cost of buying and selling higher whilst paying the government a new income. That is exactly what has happened in Australia. Just look at the house affordablity issues facing Sydneysiders today. First home buyers will simply be priced out of the market.
Denis Allais
All nice comments but all fail to understand that the house market is not a "real" free-market. By that we have to understand that we all need a house to live in: so the demand is rigid. Then the cities/governments give permit to build (and they have their rules, delays, protection, etc), so the supply is not that elastic either. It was the same on the Titanic: 1500 people but only 900 lifeboat seats. Whatever you did there was not enough seats to save everybody. At least they decided to shelter children and women first, not leaving it to a "market". Housing is not like flat TVs where you have 20 suppliers battling on price. The Government has to allow more houses to be build, whether up (vertically) or further out in new cities.
Annie (Mt Wellington)
No, there should not be a capital gains tax. There has been enough meddling in our financial affairs from the Government.
Real Estate Salesperson (North Shore)
We are currently mostly selling to Asian & buyers from the UK. Multi offer situations are common place and the overseas buyers totally outbid kiwis looking to purchase (not all, but a lot of the time). Why doesn't the Government only allow NZ Residents to purchase here? And I agree with the agent from West Auckland who commented in here already, we have buyers with cash, ready & waiting & not enough listings. It's not slowing down price-wise in my neck of the woods!
Steerpike
We don't need a new capital gains tax. IRD should just apply the existing rules. It is crazy to allow landlords to buy rental properties which will never make a profit on rents and then allow them to write off their losses against other income before selling it on. Any property investor with rental property should be assessed as a speculator selling houses at a profit unless they can produce a plan showing their property can produce a taxable profit within a reasonable time period.
Andy (London)
Let's drive more people and money away from NZ. I am in the UK working with the intention of investing my money in NZ property. I know a huge number of kiwis here with the same intention. If it becomes unprofitable then my money will not contribute to the NZ economy, but be invested elsewhere.
To the person encouraging tax breaks for investing the stock market, do you not realise the stock market is one of the great evils of modern economics and this is something that should be taxed out of existence? Property investment provides housing for the country and employments for the vast numbers of trades directly and indirectly associated with the building trade. What does the stock market provide? An initial cash injection for the company selling the shares and then becomes a way of people trading them and making money out of nothing, thus fuelling inflation. If NZ wants to compete internationally, we need to encourage people to come to NZ to live and work (and ex-pats like me to return) and they all need places to live. Who will provide them if not the landlords and developers? Shall NZ become a nation of statehousing? I certainly hope not. You do not help the poor by taxing the rich. The taxes line the Government and their consultant's pockets, not towards providing better quality of life for the poor. Reducing the capacity for private people to make money only serves to drive the young and motivated off shore, and leaves the rest expecting to have everything handed to them on a plate by a government that has massively less tax income because the wealthy have shipped most of the wealth off shore. Basically we'll be left with a pseudo-communist state of workers with no industry to work in because the businesses are gone. I love NZ and buy NZ products whenever possible over here, but have less desire to return when I hear this "head in the sand" kind of claptrap.
Arron
Absolutely. No one could bring up a valid reason why investment properties (anything other than the primary residence) should not be subject to CGT. But it will never happen as the baby-boomers in both Labour and National own multiple properties and only have their own interests at heart.
Tane
I had to laugh reading the comment asking for "Capital Loss Refunds when our property prices fall and we little people have to struggle through." Given the proposed capital gains tax would be on investment properties, I hardly think those affected would be the "little people" who have to "struggle through." The reality is the "little people" are becoming tenants in their own country while a completely unproductive speculator class drives property out of the price range of the average Kiwi mum and dad.
Wongkh
Alan Bollard is wrong about capital gains tax for housing. The problem of high property prices is not only about immigrant and wages. Yes, more immigrant and higher wages means higher property prices. Simple economics means that if you have more money you can afford to pay more and if you have more buyers then the price of property goes up. But has anyone really look into the supply side of the property market? I find it extremely strange that in a country like New Zealand where population density is so low, that land prices is so expensive. Please note that cost of land is the major cost of any property. Next we should look into the cost of materials. Most building materials (timber frames, claddings etc) is a cartelised business. This means they cost more than they should. Alan Bollard should instead challenge the Government's (politicians I mean) to look for incentives and legislation to increase the supply of land and lower the costs of building materials.
Serious Saver
It is long past the time when a capital gains tax should apply to rental property, and not at half the normal tax rate given that taxes may come down in the not too distant future, surely that would defeat the whole purpose. This should slow down the over heated property market and in time enable those who wish to purchase their own home to be able to do so as house prices should come down, even if only a little. Most OECD countries have capital gains tax.
Richard (Singapore)
I still do not understand why the NZ Government has not imposed a tax gain on those people who sold their house before three years, just like what the Singapore Government ddi to bring the prices of houses down. Also in Singapore, foreigners are not allowed to buy landed properties. They can only buy an apartment which is higher than six storeys. The NZ government should have learned from the Singapore Goverment. Also Mr Bollard's proposal for capital gain taxes is opposed by Labour and National. Is it because many ministers in National and Labour parties themselves owned a lot of rented properties that they go all the way out to oppose it just for their own benefit?
Jo (Auckland)
Capital Gains tax on property investment is a first world concept so the Government has to wake up! Stop worrying about you precious political agenda's and fix it. Where in the world have you heard something as dumb as a tax benefit for losing money on a rental house? That is the only risk! The Government has effectively created a risk-free high return investment. They have succeeded in ruining young professionals like myself with above average salaries' chance to own property. We are doomed to rent and will cross the bridge to get higher salaries to buy a house. Bring in capital gains, drop the tax relief on housing losses and give tax relief on investing for retirement through stock markets. So you get people to invest in the economy and its businesses instead of hoarding for themselves! And make a decision, stop sitting on the fence and take action! Oh and by the way, increasing the interest rates to some of the highest in the developed world causes another virtually risk-free investment for internationals, driving up the dollar and hurting the economy by hurting imports! They just can't seem to learn from their mistakes. I will vote for the party that makes these changes.
Sad
The answer is simple. Stop the tax write off of "losses and depreciation" etc, on rental properties against the interest charged against the property. This is why rental properties are so very attractive to investors. Where else can the Government, through the IRD, give you such a generous handout?
Neil (Auckland)
Surely house prices, just like any other commodity in a market economy, is subject to the laws of demand and supply (as taught in 5th form economics), high demand + low supply = higher prices. Instead of trying to reduce demand (people still have to live somewhere!), the obvious solution would be to increase supply (i.e. free up land for development. The Government and the Reserve Bank are trying to tackle the problem by reducing demand, which, if it works, will only work in the short term. Helping people financially (i.e. Kiwi saver) will only pump up demand, which will increase prices further. Capital gains tax won't be implemented here since a large number of parliament members own multiple homes (including Helen Clark and the Housing Minister).
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