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As the property market slowdown gathers momentum, Inland Revenue has warned it will crack down on property speculators who fail to pay tax on their deals.
The move comes as experts predict property values could fall up to 20 per cent, prompting investors to bag bargains to sell when prices rise again.
The department estimates property speculators who fail to pay tax on houses they buy and sell for profit dodge paying about $100 million a year in tax.
It has launched an advertising campaign to educate investors about their tax liabilities. It warns that the campaign goes hand-in-hand with steps to ensure the law is more effectively enforced.
An Inland Revenue spokesman told the Dominion Post many investors did not realise that dabbling in the market could incur tax liabilities.
"Essentially, if people bought and sold property with the intention of making income - as opposed to living in the house, for instance -- then the income is liable to be taxed, like any other income," he said.
- NZPA
