I already have capital gains tax on my property investments and it doesn’t stop me staying heavily invested in property.
Anything I have bought for several years now has been subject to a 10 year bright line test, it’s a law they bought in specifically for developers. In fact, if I purchase a property from one of my own developments I become subject to capital gain tax forever, no limit, if I sell in 30 years time I still have to pay income tax on the gain, another rule for developers. So in some ways a broad based capital gain tax is just levelling the playing field.
The main impact of a capital gains tax on property will be more income for accountants and lawyers as there will no-doubt be complex new tax rules to understand, and we’ll also need more government staff to administer the new tax.
The final impact will be more upward pressure on rents as landlords will be forced to balance their books in the face of higher costs. And for those of you that think rents can’t continue to climb as tenants can’t afford it – don’t forget that your taxes already pay some of the rent for 136,000 households across New Zealand through the Accomodation Supplement, at a cost of $361 million in 2018 alone.
So rents will continue to rise.
