This is a very good move from what we have learnt today. It will hopefully catch the speculators who are ramping up the market while hiding in the shadows. It will mean that anyone who buys and sells a property inside two years will have to pass the “tax test” to see if tax is payable or not.
Overseas speculators too, who may hide behind dirty money, will have to give their details as well, and then pay their share of tax.
Locally, the spruiker outfits that promise unlimited profits from real estate will feel the pain, as their clients come to realise that from now on they too will be under the spotlight, warts and all.
Property investment is a hard slog, but with the right advice and over the time it can be very profitable.
The new rules will likely have to be legislated and tweaked but from 1st October, it will be game on.
The Reserve Bank may as well shelve their LVR rules, which only favour the rich, as this new move will be far more effective in stabilising the market and blowing the froth of the top.
Genuine investors, who seek security, passive income, and long term growth will surely welcome this move positively.
“The Government’s 2015 Budget will contain several measures to ensure property developers, including overseas buyers, “pay their fair share of tax”, the Prime Minister announced today.
Speaking at the National Party’s lower North Island’s regional conference in Lower Hutt today, John Key said everyone – whether from New Zealand or overseas – should pay their fair share of tax according to the law.
“People calling for a new capital gains tax often overlook the fact that under existing rules, anyone buying property with the intention of selling for a gain is liable for tax on that gain,” he said.
Mr Key said this week’s 2015 Budget announcement will contain several measures to bolster tax rules on property transactions and to help Inland Revenue enforce them.
Such measures will include providing Inland Revenue with extra funding for compliance and enforcement, requiring non-residents and New Zealanders buying and selling any property other than their main home to provide an IRD number, requiring non-residents to have a New Zealand bank account, and introducing a new “bright line” test to tax gains from residential property sold within two years of purchase.
The bright line test will not apply to a seller’s main home or an inherited and transferred property.