Olly Newland has twenty questions to ask before you buy (or sell) your property

Olly Newland has twenty questions to ask before you buy (or sell) your property

By Olly Newland

1. If you own a home you live in but then move into the home of your partner and rent your house out to cover expenses does a CGT apply if you later sell your home for more than you paid for it?

2. Your mother becomes frail and leaves her apartment to go into a retirement home. If she rents out the apartment to help pay for the retirement home and eventually sells it for more then she paid does she pay CGT?

3. If your mother passes away while she is in the retirement home and leaves the apartment to her children in her will, do they pay CGT if they then sell it?

4. You and your partner buy an investment property. You and your two children spend a lot of money upgrading it to make it a nice rental property. Besides using contractors to do the specialist work you spend 100’s of hours cleaning, painting and scraping down the woodwork yourselves. Some time later you sell it for more than you paid for it. Does your labour get included in the overall expenses and if so at what rate per hour each can be charged for your time including the children?

5. You and a friend buy a house 50/50 between you. For you it’s your first home, and for your friend it’s an investment. Does CGT apply to one or both of you if you eventually sell it for a profit? What happens if the investor / partner lives in the home as well?

6. You own a farm that’s been in the family for generations. You want to leave a third of the farm to each of your three children and keep the homestead and a few acres. You sell at well below market price because of love for your children. Do the children become liable for CGT if they sell later on at market price? Do you have to pay CGT on your homestead if you sell it as it is a newly created property when you gave parts of it away?

7. You buy an investment property to set up a retirement fund for retirement. Unfortunately it’s a leaky home and the costs to repair are impossible to pay. You sell it for a big loss. Can you claim the loss in full as a tax deduction against your total income in the future?

8a. You own an investment property but times are tough. You can’t keep up the mortgage payments so in the end it is sold by force through a mortgagee sale. Surprisingly there is a small profit left over for you after all the mortgagee expenses have been paid. Do you pay CGT on that small profit despite it being a forced to sale?

8b. In the same case if the house is sold for more than you paid for it, but the mortgagee takes all the proceeds, do you still pay CGT although you got no money out of the sale?

9. You and your brother / sister bought an investment home together. Later you sold it in order to buy two apartments for you to each live in as your respective homes. If you pay CGT on the sale you will not have enough to buy your separate apartment homes. What happens in that case?

10. You buy a share in a large syndicate syndicate and all goes well. Later a majority of the owners decide to sell, although you voted against it. The sale goes through and you have made a profit against your will. Do you have to pay CGT on that profit?

11. Will there be a time limit of ownership before a CGT no longer applies and will inflation be taken into account?

12. If you own an investment home through a Trust of private company and later sell it for a profit, will the Trust or company be liable to pay CGT or the Trustees, beneficiaries or shareholders?

13. If you own a business and work very hard at it for years and it becomes very successful what happens if you sell it one day for a profit. Does that attract CGT, and if so how is it calculated?

14. If a CGT is brought in will it be retrospective and catch all properties bought before the tax is in place? If not, does that mean there will be two markets, pre tax and post tax so those who bought before the tax can keep all profits tax free, while those who bought after the tax will pay it?

15. If you sell an investment property and CGT is payable do you have to pay it when the deal is signed up or when it is settled? What happens if there is a very long settlement date?

16. If you buy an investment property would it be better to split the ownership up between members of the family to take advantage of lower tax rates or will the CGT be applied equally?

17. If you move overseas and leave your home rented out while you are away, but then decide to sell it, will any profit be subject to CGT?

18. If your investment property is totally destroyed by fire or earthquake, and you get paid out by the insurance company, is any profit over the original purchase price be subject to CGT?

19. If you sell your investment property one day, is CGT apply to the chattels that were included in the price, even if they make up a large part of the total money paid?

20. You feel sorry for your children who are struggling to buy a home of their own. You buy a home for them and allow them to pay you a cheap rent while they save up a deposit. They eventually buy from you at less than market price but more than what you paid for it. Does CGT apply in this case?

--------------------------------------------------------------------------

Olly Newland
www.ollynewland.co.nz  Used with permission.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

82 Comments

Comment Filter

Highlight new comments in the last hr(s).

Olly .. no mention of indexation to the base cost price

Very odd post - I assume the assumption is that CGT is charged on all but the 'family home' - in which case it looks like the answer is yes to all, perhaps with some kind of apportionment type calculations for some.
 
If Olly was trying to make the point that it's all too complicated - then the answer (if a government wants to widen the tax base with this type of instrument) is to include the family home as well.
 

Including the family home in a CGT is more than a simplifying measure - it's common sense. Tax shouldn't be a factor in deciding whether I:

  • invest a productive asset (like a business) and then rent a house; or
  • own my own house.

CGT should apply to both situations or neither. Simple as that.
If a CGT is too complex, how about a land tax? Low value, broad base, stable revenue. Use the proceeds to lower personal taxes.

Well said. CGT for political gain at the expense of good tax policy.

CGT to Labour and the Greens are just isolated to targetting a very small group of 20,000 property speculators. It does not affect the 250,000 property investors
 
Interesting numbers which distincguish between speculators and investors - where do they come from?

Spoken like a true speculator zanyz ( thay hello to kimy for me)......yes the policy needs to be thought through carefully to ensnare all forms of Tax evaders reliant on property as a mechanism.
As for the 250, 000 who do not sell....um , I think you made that up, but the tickers seem to like it, so good for you for getting away with a bit of bollocks.
 Everybody....has...a ...price...at ..which ..they...will ..sell.! even Olly, if anything the CGT will come too late to be effective policy.
While we're on a bitch session, I don't recall ever leasing my property from Auckland City, but I'm sure as hell going to pay them 200,000 (static)... plus over the next twenty years in rates.
WTF is that about..?

Can I buy an investment property, sell it to my kid for $1, and claim a big CGT loss. My kid then lives in the property so never pays CGT when he sells it.

Can I sell an investment property that has apprecited in value from a trust to myself for a lowered price, live in it for a while, then sell it as my own home?

What if I bought a property to be my child's future family home and in the interim it is rented out - say for 10 years. If my child sells this property do they pay CGT?

If you could/did, the trust was obviously a sham in the first place.  So, you can not only pay CGT but the IRD would/will likely get you for a whole lot of other things as well.
 
As Clint would say - "go on, make my day" :-).

And if you can't achieve that valuation you have to pay tax on it regardless? Or do they have some kind of allowed difference between valuation and sale price?

You said sell it out of your trust to yourself at a false under-price, then you say "if you can't achieve that valuation" but of course you are not paying market price ergo that sounds like tax evasion to me and I'd hope you get royally done.....say you live in it for 2 years then sell, so 2 years compount interest and penalties....hopefully even more....like jail time. 
regards
 

You would have to justify why it is the interests of the beneficiaries to sell the property to you at under market peice (in writing).  Likeliy any lower price would be seen as equivalent to payment to you (eg low interest loans, the difference in interest between the listed interest rate and the market interest rate, can be considered income in almost every situation.)  (side note: interest costs can only be claimed by the business party who gains the long term advantage - if you buy the property off the trust, with money borrowed from the trust, and the trust got the money from the bank at interet; then the trust cannot claim the interest paid to the bank because the trust is just lending forward and isn't the party utilising the funds - eg you end up with the property ownership rights long term.    IF you pay interest to the trust, AND the property fits sole trader (eg rental) vs personal consumption (eg own home) you may be able to claim the interest paid as an expense (which you couldn't do if interest is amortised into the principle by the trust.). 
  I would recommend careful and clear documentation, and include in writing details about discussing it with IRD for clarification.  A tax or trust accountant may help, but they aren't liable if things go wrong.

You also have to be careful of who are the Trustees and that you have the WHY THIS IS GOOD, well memo'd.

but the initial comment, why not, but the trust must have reason to accept to cover the differential.

(obNote: I am not financial advisor nor professional, I do not know you personal circumstances. make sure you personally check everything with properly qualified interviduals and don't just trust their answers.  especially if you don't really understand them....) :)

All good questions Mr Newland. A further question from another angle: What impact will the introduction of a CGT in NZ have on the supply side of the housing equation? 

Supply would improve as all the Jimbo's scramble for the exits.

My understanding is that CGT would be payable at time of sale. To avoid paying GGT just don't sell. 

But the Jimbo's of this world have to sell because they structured their affairs based on a rug that is being pulled out from under them metre by metre.  

Not sure I understand what you are saying? Are you saying CGT will stop people selling and that means houses disappear?
The house will still be there as either a home or rental property.

A lot of property that would have been sold won't be. The housing stock will still be there of course but the number of houses for sale will decrease. This reduction of supply will create upwards pressure on prices. I am not saying that any exitising housing stock will dissapear, just that less will be available for sale. 
 
Without CGT one might decide to sell a rental property and buy or build a new house for example. With CGT you are probably better off just holding onto the original house. 
 
We need policies that encourage development, not more costs added to an already overly costly planning and development regime. 

Does that just not result in an increasing supply of rental properties, there by limiting (or even negating) any rent increases. 

Possibly. However with a decreased number of properties available to buy there will be a decrease in the number of home owners. The flip side of this coin is an increase in the number of people looking to rent property. With the decrease in houses available for sale, prices will push up. Costs must be passed on so rents will rise. From where I'm sitting if you are a FHB locked out of the market, it's lose, lose, lose. 
 

...and then the RB start making noises (the subsequent article on this site) about targeting property investors.
Looks like we will be living in 'interesting times' over the next 12-24 months.

...and then the RB start making noises (the subsequent article on this site) about targeting property investors.
Looks like we will be living in 'interesting times' over the next 12-24 months.

Moaning Moa - the under-supply of housing which is driving prices higher will not be dealt with. Rents will increase due to limited supply. You have to remember NZ population is increasing which is driving the demand for housing.

That assumes we have 'full occupation', and if supply was already tightly constrained then wouldn't rents be increasing as fast as house prices?

but when you retire, you will sell, either that or you cant live for ever and your kids pay the CGT.
regards

double post

Olly,
All good questions which will need answers presumably before an election where a CGT is a key platform.
Here is Wikipedia's reasonably detailed description of Australian Capital Gains Tax; which would answer at least some of the questions in the event we follow similar rules. Notably Australia ignored any assets owned at the time of the introduction of the law- it was only assets bought after 1985 when it was introduced, and that have since been sold, that have had CGT applied. Am not sure if a similar grandfathering approach is planned here.
I also note that in Oz, if an asset is kept for more than a year, the capital gain is first halved before any tax is applied. Again, am not sure of the plans here.

Gareth morgan had a good idea of making the setting of a tax policy independant of politicans.
The problem is changing something people are accustomed to.

.....and when will this CGT start from?  Imagine the issues with shares...bought and maybe some sold over any number of years, no records because jo blogs wasn't concerned with CGT.  Which are the shares he still owns, the ones bought back in 1970, then sold, then some bought again, some issued and so on?  Who the eck is going to work all this out...let alone audit it at the IRD?

They should just ring fence property losses and stop people using the tax system to subsidise their investment. It would require zero new IRD staff or accountants to do this, could be enacted immediately and apply to the current year, would immediately result in higher tax revenues, everyone would understand it, and in the end probably collect more than a CGT (which would certainly restrict supply in an already under supplied Auckland market).
 
It would also meanpeople would enter into an investment based on the return, not based on structuring their tax affairs, and property investors would have to compete on a level playing field with home owners (who cant deduct running losses on their own home - therefore making property in essense more expensive for the latter).

Speaking of the UK, they've had a CGT for decades now and thier property values went up further and crashed harder than in NZ during the naughties boom. 

Guess what Zanyzane? - not ring fencing in NZ has meant the NZ govt has missed out on many billions in tax revenue over the years.
Also it gives property investors an unfair advantage over home buyers in NZ.
Also it means home owners (not investors) bear the greater brunt of our RBNZ OCR policy which may have to raise rates higher than it otherwise would as a good portion of the market get a tax refund the higher mortgage rates go. Home owners with a mortgage don't get this tax 'rebate'.
Or are you referring to it not stopping house prices long term growing anyway? I was referring to govt tax revenues.
House prices will grow over time as people will do improvements, build bigger homes (the average new home is a lot bigger than it was decades ago), populations have gone up therefore there is less land resource per capita, inflation, income growth. I don't see growing house prices as a big issue. There are not giant gates around Auckland and people are free to live elsewhere in NZ where houses are much much cheaper. If people choose to pay 1 million for a house, good on them. The problem I really have is that investors are not on a level playing field because of the tax rebate cashflow they are able to obtain over actual home owners. I think that is unfair.
 
Ring fencing losses wouldnt introduce any more complexity or compliance, the opposite would occur (as many salary and wage earners would not have to file a personal return to offset losses), investors have to do their accounts now anyway, all it would mean is that they wouldnt then take that loss figure from their property investments and reduce their personal income tax payable. Simple. Easy. Clean. No hole in the govt tax revenue. Level field for investors and home owners.

I do hear what you are saying Zany, but housing is different to a 'normal' business. People have to live somewhere.
Surveys have shown that home ownership has great spin offs over renting - more security for the family, kids schooling is less disruptive, people can improve insulation in the house they are living in, they are more inclined to become 'better' citizens of their local community, etc etc... I disagree, people if anything should  be encouraged into home ownership. They are more likely to spend money on home improvements if they are a home owner. This creates productive jobs.
 
I am one of those 250k investors with 3 rental properties at present (not looking for a 4th - the numbers don't stake up long term at present - esp with coming rising interest rates, if anything looking to reduce and sell down). The reason you say it takes a lot of effort to have a successful portfolio is because the capital price is probably too high given the income rents generate. That's not an argument for taxing the family home, or buying another property, but an argument that housing probably isn't a buy in many places right now, from an investment point of view. Everything moves in cycles.
 
As to the level playing field with other businesses - let's be honest here, most property losses arent really investment losses at all (not like a business that builds boats for example), property losses are just really cashflow deficits while the land creeps up in value over time. A CGT is complex - do you adjust for inflation? Housing inflation is different in every city. You would think that if you sold an asset you could use that money to buy the same asset down the road, a CGT makes this impossible, especially for the family home. You shouldnt be in the position of selling your home, having to pay tax but then having to save more money just to buy the same house down the street, that doesnt sound right to me. If I sold my home at a profit from what I bought it and moved accross the suburb and bought in essence the same house, I should have to pay tax as really I didnt make any real profit/income and my family home wasn't bought as a business anyway. Or are you suggesting my moving costs would be tax deductable?

The same argument doesn't apply
 
If you are renting out lamborginis you are doing so with the intention of making a taxable profit, or else you are a lousy businessman.  Therefore your future taxable tax will offset your current tax rebate.
 
With housing there is no tax offset as the profit in the future is a non taxable capital gain, therefore you receive the benefit of tax rebates but pay no tax even if overall you have come out ahead.. 
 
Nobody goes into business with the intention of making losses, except for housing in the short term because of the tax advantages.
 
Ring fencing the losses would therefore seem entirely appropriate.
 
 

'Ring fencing the losses would therefore seem entirely appropriate'
Yes, that's my point of view too.

The issue of ring fencing might be fairly academic now. With low interest rates and no depreciation claims the losses being claimed on residential rentals will be miles less than than they were a few years ago.
Any investor making a tax loss at present and paying back principle on a loan is going to have to write out some very big cheques when rates do rise.

Agreed. Which is why its not a bad time for the govt to make this change now. It wouldn't crash the market, just rebalance it fairly so home buyers could compete with investors, while at the same time smoothing out future tax revenue.
With the RBNZ looking at property investors specifically , both Nats and Labour wanting to win the next election, AKL housing affordability a big issue (the rest of NZ could be dismissed for what all the fuss is about)  - either of them (esp the greens) I wouldn't put past changing the rules again, and I'll bet it will not be in the property investment favor, combine that with increasing interest rates and low rental returns in AKL and its easy to justify not buying more property esp in AKL.

.

Yes its a business Zany.
A business where you can keep claiming tax refunds, yet suffer no loss of net wealth/asset value, in fact see your net wealth grow tax free. A 'normal' (lambrogini rental) business doesn't grow this way. Ring fencing would be the simplest and easiest way of addressing this at no administration cost, which everyone could understand.
As Olly points out above CGT is just complex (and I'm sure he could think of another 20 questions if need be).

economist,
 
Have you heard of the risk free return method, which the Tax Working Group were investigating back in 2010? 
 

"This paper discusses the merits of applying a RFRM to property, in particular, housing. This would involve annually applying a risk-free rate of return to a taxpayer's equity in a property and taxing the result at the taxpayer's marginal tax rate.

This method was first suggested in the Tax Review 2001 as a way of rectifying whatwere perceived to be biases in the current income tax system (imputed rental income and capital gains not generally being taxed), thereby enhancing the overall coherence of the tax system. Because RFRM would result in an annual tax, it would avoid the problems associated with a realisation-based capital gains tax. "
 
https://www.victoria.ac.nz/sacl/cagtr/twg/publications/3-other-base-broadening-ird_treasury.pdf

How does it get around the issue that if I sold my housing assets and purchased back those same assets I havent really made a real profit, therefore why should I sell those assets only to have my housing wealth decrease by the tax amount? Surely the idea is that you should pay tax on income or increases in wealth but I could argue that my house has gone up in $ value - but so has where I want to move to (a rising tide lifts all boats), so in real terms I am actually no better off, so if I am no better off, why should I have to pay tax on this zero real increase in income/wealth? This would be somewhat unfair esp for the family home for people who moved home. The more you moved house the poorer you would be (if you are moving from equal value homes). Who sets the RFRM rate? Potentially its different from city to city and from surburb to suburb. Its unfair to pensioners and other low income people....
 
A good tax system is simple and easy and you shouldnt need more lawyers and accountants to understand and take advantage of it.
 
Have you heard of the transaction tax report the RBNZ did and found that a 2% tax would be enough to replace more than all other taxes combined?
The report got buried - too many vested interests. It would wipe out the need for the IRD, tax lawyers and tax accountants, entirely overnight....

the ideal would be that the public pay as little tax as possible in the first place.
which would make much of the money grubber by IRD and government redundant.

My UK and USA contacts report no knowledge of Americas Cup.
Only NZ had skin in the game. Ours.
And that leverage could not beat a billionaire at his own game.
Computerised Match fixing.
All them little drones imported from NZ will never change the fact that a Billionaire will beat a few NZ dollars, just for the hell of it.

I look at it as Christian vs Arab money - a big percentage of which flowed into NZ and NZers pockets. We really won, even though we lost. Congrats to each and every NZer and NZ company that had a hand in it. 
 
I'd like to think our team were the better sailors - but we'll never really know whether or not that was the case .. which has become the real disappointment regards the tradition that is that contest.
 

proud of the boys but the arrogant and premature presumptions of some commentators will mean egg on the face of some (perenial goofball John Roughan for starters)

Now how's about some real data matching:  a simple tweak to the title registrations could possibly do this.  Prolly possible via a Regulation, which can happen by lunchtime.
 
My brainfart:

  • Require that, for every interested party to a title or other registrable instrument, a valid, current IRD number be supplied as a condition of registration.

 
Instantly, one has a host of implications: mostly useful, some very much so.

  • The question of citizenship or otherwise can be answered (IRD # matched to person and status)
  • Ditto age, gender, etc for natural persons
  • A locus for any applicable taxes is established
  • Companies etc are able to be cross-matched to Companies office registrations
  • Real RE data, instead of the waffle and conjecture which is the basis for so much 'debate' on this subject.

I'm sure common taters can think up many more implications, and their pros and cons (which I've not thought much about - that may show...).

waymad - do any of the government agencies do any data-matching?

Not sure, not in that biz.  But near-certainties, judged from the occasional Cautionary Gubmint Advertisement:

  • IRD to DIA for passports etc.
  • DIA to WINZ for benefit etc controls
  • Justice to all of the above.

 
But you have to remember three things about Govt.

  • Highly silo'ed - patch protection rules, and shared/common services is a very recent concept.
  • High variation in systems - IRD staggers along with mainframes running COBOL, tended to by rapidly aging boomers - whereas Health has tended to orient around (last I heard) Oracle financials, Orion data hubbing and messaging, and so on.  Getting all these disparate systems to do nice talkies in near real time is a significant technical challenge.
  • Privacy Act.  Two little words that have a host of implications.

 
But on the bright side, most every Act has a little clause squirreled away near the end which allows Regulations:  the Land Transfer Act 1952 has the following, f'rinstance: (a most useful site here)
 
236 Regulations

(1) The Governor-General may, by Order in Council, make regulations—
(a) regulating the practice and conduct of business under this Act:
(b) prescribing periods of time for the purposes of giving notices and other matters under this Act:
(c) prescribing the manner in which instruments must refer to the register:"
and so on.
 
So, requiring the IRD or GST rego would be simply 'prescribing' the content of an 'instrument', by reference to a required attribute of the 'proprietor'.
 
Is that rustling the faint sound of an OIC being rushed across to the GG?

I'd be entriely comfortable with this and think it would drag some much needed sunlight onto parts of the economy, but then I don't personally drive financial benefit from anonimity via hidden trusts or shell companies. I could see people who do have such interests objecting to the nanny state regulatory burden making commerce impossible. 

Reposted from another thread:
Why won't the politicians look at some sort of stamp duty or financial transaction tax on property transactions? Even if it does nothing to curb house prices it would be an easy source of revenue that would catch foreigners, would not be overly complicated or costly to administer and would not fluctuate with down turns in the housing market like capital gains would.
Say a flat 4% tax was applied to the purchase price of all residential property payable by the purchaser before the title could be transferred.
Give owner occupiers a rebate/exemption of up to $20K to give them an advantage over investors. Link property titles to IRD numbers to track which houses have been registered as owner occupied and whack cheaters with 100%+ penalties if they try to play the system. Have a seperate rate for bare land and exempt new builds/homes to encourage investors to provide quality accomodation to their tenants.
Will probably generate a couple $100M that could be pumped back into other housing inititives. Might not be quite as fair as a capital gains tax, but would be a lot easier and cheaper to comply with. The main drivers for capital gains tax are accountants and lawyers anyway.
 

Part of the Documents which make up NZ's constitution framework is the Universal Declaration of Human Rights.

Article 25.

  • (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

Now Labour and the Greens have some explaining to do as to how they can achieve the affordable housing side while marketing their policies of CGT to the voting public.
Is the Labour party  Product (policy on CGT) able to achieve affordable housing? If not will they stand behind their product and allow consumers (voters) a money back return.
 
The only thing required from any Politician is to stick to the fundamentals of "everyone has the right to housing" and then remove impediments that Politicians have created through the legisltive process and policy.  Remove the Councils stranglehold that you previously handed them to them. Remove the RMA, stop allowing anti-competitive behaviour.
 
Sustainable policy grants people the freedom to act in accordance with the Universal Declaration on Human Rights and the Bill of Rights and any other document which makes up the constitutional framework for NZ and there is not one Politician or Bureaucrat who seems to understand what sustainability is really about.
 
Labour and Greens are selling snake oil products.
 
 
 

You have the Right to housing.   Sure, but you have to pay for this right.
In fact; since it is a universal right, all NZer's need to be paying for it...whether or not they're able to use it (eg Chch, Auck garages)
 

Question 21.....some fat boomer grabbing properties as far back as the seventies, leveraging the bejeesus out of them to aquire more and more property including commercial, all the while uses to the leverage position to avoid taxation over half of someones lifetime. Then sees an opportunity to really cash in on a flood of foreign money needing a home and willing to pay any price to find a clean laundry basket .
Should he cop a CGT after a wet nursed hay ride like that..?
Too bloody right he should...cough up Olly , pay your fair share. 

:)

:) :)

:)  :)  :)

actually the really sad bit is most of tose properties haven't gained that much value...
It's just the compounded effect of everything else falling apart.

cough up Olly?  Olly will pay CGT?
My ( ! )
 

Quite so...Chairman , quite so. { : > )

The last few comments are typical of the losers who don't have the intelligence to discuss a serious subject.
Instead they resort to playing the man, rather then the ball.

Hey Hey come on Big D....discuss...?  I have the books , all primarily allude to tax avoidance through this mechanism.
 Just because we don't agree  does not mean I have not read Olly's literature, it just means I don't want to be a deciple  of his teachings for the sake of ....more money.
You have a nice evening.

You appear to be suggesting naively Mr Zany, the motives of the author are without intent to avoid taxation that under normal circumstance  may be applied.
Legal may be correct, but it is the collective attitude of well schooled tax avoiders and those that make policy that places unnecessary burden on your average income earner.
Whatever emotive dribble you feel Christov is spouting, he/she has clearly hit a nerve, and conveyed a wider sentiment.

Nonsense, Mr  Z  the author has made a career out of  prescribing tax avoidance involving ways to get around the straight forward returns. It's "grey"incidentally .
Sinister ? No not sinister, just a reflection of the attitude of those that can afford tax avoidance.
The hairs you are splitting here are legal vs moral.
As you appear to have a vested interest in property geared for tax avoidance, I understand your hostility and bid you good day Sir/Madame. 
 
 
 
 

Fidel Steekes - One could argue using your legal vs moral hypothesis that ordinary employees who have a set income are also using legal determinates in their postiion as they are carrying out their daily duties legally BUT is it morally OK?
Every business creates employment for others somewhere along the way and that includes PI's. Employees actually have limitations on the amount of input they have into the wider economy and one could argue whether this is morally OK for these people to have this lower level of input in comparison to business which carries all the risk while making jobs available to those who do not wish to add significantly to the economy.

Tax avoidance is legal.
Tax evasion is not.

Got to admit that re:tax avoidance is a recent and local phenomena.

In the US (and in their self help books) and many other countries such arragements are seen as proper business.

Am I missing something? Where are the answers? Or doesn't the poster know themselves. Or is the answer yes at certain degrees to all?
I was under the improession that for a house that you purchase to intend to live in, then you don't pay any CGA at all, even if you later move overseas, and keep it solely for renting out. But maybe not? But how many people are actually paying tax an most of the situations above, probably hardly anyone.

Rob
You have misunderstood the questions.
At the moment there is no true CGT so there are no hard and fast answers to the questions.
What Olly has done is to ask important questions should a CGT be introduced, as many predict.
Any political party that promises to introduce a CGT should explain very early on, how it will work by answering these ( and many more) questions for a start.
As the election is next year everyone should demand right now, a detailed explanation from the parties that support the idea.
At the moment all we know is that a CGT is a major party policy, but we have idea how it will work in reality.
In any event it is almost certain that a CGT will hit everyone hard, unless they live in a cave with no family, job or cash.

.....I imagine that a certain amount of pre-plannng is already taking place e.g. selling investment properties at market price from one entity to another (most likely trusts) and so an future CGT will be mimimal ... and more than likley capital losses received if the market comes off the boli. CGT would be a very risky step.... those promoting it make no mention of the downside, that being the ability to claim losses.

'Any political party that promises to introduce a CGT should explain very early on, how it will work by answering these ( and many more) questions for a start.                                             
'As the election is next year everyone should demand right now, a detailed explanation from the parties that support the idea.'
 
 
 
I assume  your demand only applies  to Labour Party policies?
Iv'e been waiting for 5 years for a detailed explanation on many of Nationals policies.but all we get is a shrug and a smirk.
If you are genuinely concerned, about the details of a CGT, check out how they managed to stave off the end of the world, when it was introduced in Oz.
 
 

Mr Zany, this post appears to be in  complete contrast to your post just prior  in the CGT thread.
Tax avoidance is clearly what you are advocating, even suggesting outright non compliance in declaring.
You have inadvertently confirmed the opinion held by the poster you referred to as spouting emotional dribble.
I think perhaps your emotive interests are getting the better of you.

 That could be said ,of any tax.
I think you're over egging the situation.

Not true.  GST is highly efficicient in NZ (not so much in Aus).  I am politically neutral on tax, my interest is on the fairest and most efficent way.  Those promoting CGT seem to overlook (conveniently) that is is a very very expensive tax to chase, easily avoidable and does nothing but create work for accountants and lawyers - these costs will fall on us all as IRD will need a new army.
Do some reserach and you will find it has not achieved anywhere else in the world what the promoters here claim.  I'm all for tackling property speculation, but there is absolutely no evidence that a CGT will work.  It will just be another non-productive job scheme for professionals (and that's why they are not speaking out against it!)
I'd be all for a land tax on all land...then the PI's and land bankers would be caught regardless...no way out.

(1) "Lumping in" charging like that is illegal in NZ.  Taht's why the district councils could no longer put regional council charges through their system and had to go to large expense duplicating the whole billing and collection system.

(2) You could add 0.25% to regional rates..... But that's already being done, at 15% and it's called GST.  Really shouldn't get into double taxation.  (Rates are charged on capital value of property, thus GSTax is charged on that capital-orientated charge.  As rates aren't for specific services they aren't a goods/service charge - as evident by the calculation via capital value.... (as opposed to cost+ or labour/material/margin etc)

Actually there is evidence it will work.  Its also fair that all profit is taxed equally and broadly as possible.  Right now there are ppl neg geared on housing with the explicit expectation that they will save on PAYE now and get a tax free lump sum when they sell.  Some ppl even leave their property empty to avoid damage/wear....
It can be evaded, yes sure, ppl work on the black market now in cash jobs....you can go to jail for tax evasion as well.  Some ppl will always try and evade....as opposed to legit tax minimalisation.
Consider how the property speculators like ZZ are complaining, that should tell you heaps on its impact, effect and efficiency.
regards

I would be interested to see the evidence Steven.. I have recently discussed the issue with a very senior tax specialist and he is adamant that CGT has not worked well as a tax anywhere. It's costly, inefficient and does not achieve it's goals
One needs to be careful to not mix emotions and politcal bias with the issue, as getting tax wrong is a major drain on being productive.   For the record, a CGT would have no affect on me at all, but a CGT won' cut it.
 

Ollie,  more considerations for you.

Same Q's above but this time involving Matrimonial Property.
eg if you split and the settlement is valued more than before?
eg if you split and one partner dies?
eg if you split and the property is joint owned as perpetuity rental, then sold as repairs are an issue?
eg if you split and one partner has spent up large on the mortgage (consolidating credit cards, loans for education, business loans)?
eg if one partner wants to sell and the other refuses?
eg vandalism from one or both partners affecting the sale value (evasion?)
eg partners split, but place property into Trust with children as bennies. what is the price of the property, and who pays?

Why people with half a brain want to support a Greens/Labour (H20Melons) who wish to impose yet another beneficiary bonus (CGT) on its people is beyond me, it WILL come round and kick them in the behind. I sure will be putting rent up when rates rise, if it came down to selling one day, it would be price + CGT...

You might put the rent up........ and the guy down the road might............ not............bye bye your quality tenants. It's a market place only............you fail to recognise that.  Real business investors pay taxes on shareholder dividends so.............please tell us why you should be exempt? Sounds like YOU want government charity 

Re quality tenants, a bit of reality for you, three properties put up for rent in the last 4 months, two had 1200 hits and had people bidding with only seeing add on TM, similar story for the other one however didn't even have to advertise, was being offered $100 more per week, I kept the rate as is, maybe not the case when rates rise, I am not a charity.
 
That how it is now, city is growing, people require a roof over their heads, end of story.

I tend to track the rate increases too.  Don't see why I should be subsidise a bunch of costs and "chances to use services" I don't use, don't want to use, and often don't even want to be offered.