OnPoint: Property Investment Federation: Just STFU
63 Responses
First ←Older Page 1 2 3 Newer→ Last
-
So, yeah, it'll probably make rents go up
In the short-medium term I think an increase is pretty much certain, and probably one that's above the rise actually indicated by economic factors. In the medium term, and definitely in the long term, it'll all settle out and we'll see a return to equilibrium. The equilibrium may be higher than it is now, but that'll be a result of money rebalancing into other parts of the economy (hopefully. Not as much as needs to, but at least some money will go elsewhere).
I predict that in five years' time it'll all look like a big "WTF was the fuss all about? *yawn*" -
Danielle wrote:
I think overcrowding mainly occurs because people are living in damp converted garages waiting for Housing New Zealand properties they can afford to pay the rent on...
I also think it's fair comment to point out that Housing New Zealand isn't going to put you on the A-or B-priority waiting list because you're in the mood for a change of scene. Not seen the PIF offering to do the Government a solid by volunteering to help clear the 380 people listed as being in "severe housing need", as of the end of February, into homes fit for human beings. Hell, a generous subsidy to make that happen is certainly more defensible than the PIF scaremongering to protect their bluging off ordinary hard working families. :)
-
If landlords sell up and get out of the rental market, they must be selling the house to *someone*. Either it's someone who's currently renting, or it's someone currently a owner-occupier, in which case *they* have to sell their house to someone, who could be currently renting, etc.
Or to someone who's back from overseas, or just moved to Auckland, or was living with their parents, or has split from their long-term partner...
-
Again, that sense of entitlement justifies my comparison with the Common Agricultural Policy. And not a single mention of paying any tax either.
At least our landlords are only fucking up our economy, whereas the CAP fucks with a lot of the rest of the world - us included. Other than that, though, the entitlement mindset comparison certainly holds. As does the utter gutlessness of the politicians when it comes to proffering an extended middle finger to the howls of self-righteous outrage.
I also noticed the tax thing. I wonder if the reporter even asked. I bet that, if she pays any, she resents every last cent of it. -
Or to someone who's back from overseas, or just moved to Auckland, or was living with their parents, or has split from their long-term partner...
Which, aside from net migration and intra-national population movement, gets balanced by people who move overseas, leave Auckland, die, or get it together with someone.
It's likely that the load of more tax would be taken by prices falling rather than rents going up.
-
Well said Keith. The hysteria of the PIF has really got on my tits. What's astonishing is no-one is making more of the fact that some $213 billion is invested in residential property yet it costs the government $150 million in tax refunds. As Mark Weldon ruefully remarked at the Tax Working Group conference a NZSE of that size would be paying about $6-8 billlion in tax.
If you claim depreciation then it will be clawed back on sale unless you sale at below the depreciated value. (And yes manipulation is going on to massage down the figures).
I'd like to see some figures on how much depn is actually clawed back, I bet it's a small % of what is claimed as deductible.
Writing the OIA now...
Good luck with that but I doubt whether the breakdown you want would be available. Bear in mind that the bit the government is focussing on is the depreciation of buildings but what's clawed back on sale is masked to some extent by the losses on sale of the fixtures and fittings. In reporting to the IRD only a single depreciation figure would be shown and any clawback is likely to be reported as "other income"
-
The CAP costs Europeans 100billion Euros against a GDP of 12 trillion, so something under 1%.
Hence it's pretty sustainable, and a reasonable trade off for food security (one must remember that starvation is an actual living memory for people in Europe) and maintenance of landscape values.
-
deprecation wasn't real money because they have to pay it back
<pendant>no, "deprecation" is what *we* should be giving *them*, innit.</pendant>
-
The CAP costs Europeans 100billion Euros against a GDP of 12 trillion, so something under 1%.
Hence it's pretty sustainable, and a reasonable trade off for food security (one must remember that starvation is an actual living memory for people in Europe) and maintenance of landscape values.
Sure it's good for Europe (ignoring the inefficiencies created by subsidised production), but it's not good for the third world or for open market producers such as NZ that lose trade opportunities.
Subsidies are always bad for the market in the long run, and the CAP is no different. Toss in its serious distorting effects on the global agricultural markets (coupled with the US' hyper-hypocritical position on protectionism) and you've got third-world farmers who cannot make a fair living from their produce because inefficient European farmers can still sell their product in the domestic market more cheaply than super-efficient subsistence farmers can get their product on the shelves. That NZ is able to out-price European produce on European supermarket shelves is testament to our ingenuity and the cohesion of our trade bodies, as well as an indictment on the CAP. -
is anyone going to mention the
fairly obvious "solution"?stamp duty or CGT.
You make a profit, you pay some tax. easy. except
it needs to be on investments and personal sales.and there is no chance of that happening. can tax the battlers because their house price went up. that's not "fair"
also on stamp duty. here in the uk it's a % up to 250k (3% I think) then it goes up. oddly enough there are a lot of houses around the 225-240 k mark.
-
Or to someone who's back from overseas, or just moved to Auckland, or was living with their parents, or has split from their long-term partner...
[Puts on Harry Potter costume, takes out magic wand]: "ceteris... paribus!"
Of course when you add more people to the housing market, more people are added to the housing market. My point was that when a landlord sells up, all other things being the same, that does not change the total housing stock or the total demand for housing, as long as that residential property remains a residential property.
-
is anyone going to mention the fairly obvious "solution"?
stamp duty or CGT.
Actually, it's even easier than that. Change the law to have a bright line rule on what constitutes "flipping", as people have called it here. At the moment, it's subjective and easily disputed. The law provides for a CGT, but avoiding it is simple.
If the law deemed a purchase to have been made "with the purpose and intent of resale" if the house were sold within x (say three) years of the date of purchase, that would simplify the IRD's task greatly. Have a provision so that objective conditions requiring sale (such as divorce, another child, death, long-term migration, redundancy) could have the "deemed purchase" waived, and suddenly there's a huge loophole closed. It has even been suggested by National, so there's hope that it might happen.
Extend the regime to include houses bought for the purpose of renting, which is another loophole, and suddenly you're capturing a lot of property speculators without unduly harming owner-occupiers.
It could also be extended further to say that the sale of more than one property in the same "x years" period, including by associated persons, is a deemed purchase for the purposes of CGT. That'd knock the use of trusts on the head.Hell, give IRD another $10m/year for enforcement of the existing law and watch the money flow. They'd pay for that extra money in the first six months, I'm sure.
-
Ah, yes... The story where the photogenically pathetic Kiwi Battler from Struggle Street ended up saying that "going out less often" would be an option.
Craig, Your struggle street battler was living in a rather nice low rise art deco block on Oriental Parade called Fountain Court, descibed in a current sale notice as having
plenty to offer including: Terrific afternoon sun and ease of access to the Harbour, local restaurants and night life, roof top access for summer barbeques and sunbathing
Not exactly your standard 2 bedroom flat in the suburbs.
-
If the law deemed a purchase to have been made "with the purpose and intent of resale" if the house were sold within x (say three) years of the date of purchase
Why three years? What difference does the term make?
Rents in NZ are at a discount to mortgage costs. If I buy a house, rent it out for twenty years and sell it, then I've lost money on the rent vs costs. The difference is more than made up by the capital gain. So why shouldn't I be taxed on the actual profit?
It's like saying that I shouldn't be taxed on a bonus from work, because I didn't take the job expecting to get the bonus.
-
This article infuriated me.
It didn't so much infuriate me as bemuse me, because there didn't seem to be any point to it apart from to let someone have a whinge in the national press. And why did they want to have a whinge? Well:
property investors are maligned in the media. That's not fair
Life's not fair, dear. Didn't your parents trot out that cliché when you were a kid? Because it doesn't seem to have stuck. And I'm sure that $700,000 a year will go some way towards taking the sting out of all those nasty playground taunts from the bad widdle journalists. Plus the double-page soapbox those same journalists gave you to whine to your hearts content. Seriously, cry me a fucking river.
In other news, lawyers and politicians form pressure group to complain about 'being unfairly maligned in the media'. More at six.
More seriously, give people a system - any system - and they'll game it to their own advantage. She has done very well for herself by doing so, and I doff my cap.
But possibly we should be encouraging investment elsewhere, and discouraging investment in property? Is that a question worth exploring? If so, is it too much to hope for some balanced journalism along those lines, rather than something that reads as a thinly-veiled propaganda piece? Clearly so.
-
If the CAP were abolished, "open market" food prices would presumably go up as Europeans bought more on that market. (Just as Chinese open market purchases sent the price of food rocketing before 2008). Total global food production would fall as European food production dropped (because farm land would be converted to lifestyle blocks and suburban sprawl).
So food would become scarcer and people in developing countries would pay more for it.
On the other side, commercial farming outside the EU would become more profitable. Which *might* help farmers in developing countries - although it's more likely that the slack would be taken up in semi-developed countries like NZ, Argentina and Thailand.
The real problem in Africa isn't a lack of market for crops, it's that governments and infrastructure are utterly fucked to the point where many people can't sustain enough economic activity to feed themselves.
For the reason I gave, there is never going to be a good selfish reason for Europe to abandon the CAP. Possibly the best route for Europe, rather than following the discredited path of globalisation is to introduce "fair trade" into their food supply systems, ensuring that the benefits actually go to developing countries.
-
RoO, I'm going on the assumption that a real CGT isn't going to happen here. That means that we have to live with what we've got, and that means a bright line that sets a minimum term of ownership below which it's assumed that all profits from sale of a house are taxable. At the moment there is no minimum term, even though there's provision to tax proceeds on sale of a house, and that makes it significantly harder for the IRD to enforce the law.
You want the perfect solution, I want the solution that can happen right now. The solution that National, in all their spineless, gutless, visionless glory might actually implement. -
Surely if a landlord sells to an owner-occupier who has been renting, demand has been reduced from the 'relatively' affluent end of the property market.
Could this not put downward pressure on the rental market?
-
If we made all gains on sale of all houses taxable, whether they were family homes or not, then I wonder if we would have to allow mortgage interest costs to be deductible. It would be an expense incurred in producing the income (i.e. the capital gain), and usually, those costs are deductible. You might have to start thinking about whether repairs and maintenance was also deductible.
CGTs are notoriously difficult to implement and administer, and don't raise all that much money. It might be easier to simply deny deductions for depreciation on buildings.
If we're grumbling about how much tax is paid on housing investments (or in this case, tax revenue forgone), I wonder if we should also be paying attention to how much tax revenue is generated by the massive investment in farming in NZ?
-
Not exactly your standard 2 bedroom flat in the suburbs.
Certainly isn't, Garry -- which was kind of my point. If One wants to run propaganda on behalf of lobbyists disguised as news, they should try picking their sob sisters with more care. (Like the "it's so unfair I this couple on a six-figure income can't afford to service the mortgage on an over-priced villa in Ponsonby or Mount Victoria" property torture porn features The Herald and the Sunday Star Times are so fond of.) Oriental Bay is a lovely neighbourhood, but I have my doubt that it's terribly representative of the rental market in Wellywood or anywhere else.
-
Matthew, I welcome any change that might make housing more affordable. It would be nice if a six figure salary was enough to pay for more than a shoebox.
However, that doesn't change the fact that our system has a *huge* bias in favour of taxing workers over capital owners, and I'm not going to shut up about it.
-
If we made all gains on sale of all houses taxable, whether they were family homes or not, then I wonder if we would have to allow mortgage interest costs to be deductible. It would be an expense incurred in producing the income (i.e. the capital gain), and usually, those costs are deductible.
Almost by definition, capital gain is not income. CGT is a tax on a windfall. I've never seen how anyone can have a problem with that.
This is symptomatic of NZs biggest problem. Everybody thinks the best way to make money is the happy money go round pyramid scheme that is leveraged property investment.
Reality bites: Landlords are already charging as much as the market can bear (it is a market). Come landlords will feel the pinch and sell, but they will sell to someone else so there is no loss of accomodation. An increase in properties for sale will lead to falling prices. Houses will be more affordable to buy, for owner occupiers or landlords. Eventually, rent will offer a sufficiently attractive return on the new prices for landlords to reenter the market.
In summary, rents are constrained by demand, so it will be property prices that move.
-
@Rich and @Matthew have good points.
Would this option work? Scrap the LAQC option. Losses are kept in the company (at the moment they can be applied to shareholders tax bill (ie, refund), same as a profit is applied to the tax bill).
So, after 5 years, my company with 5 peoperties has a paper loss carried over of, say, 100K (20K/year). If I sell a property at profit, I have to clear that loss off before I pay tax on it, so if I sell one for an 80K loss, I still have 20K of loss to get rid of before I have to pay tax on a "profit". But if I sell one for 150K profit, I have to pay CGT on the 50K (100-150).....
Depreciation makes sense and should be applied across the board. LAQC not so much.
Of course, get rid of LACQ and I'm guessing someone will find a loop hole around partnerships, which dont pay tax and just split the profits between partners (And losses, I assume?).
Or, as it's so trivial to setup a company in NZ, you have one owning trust and one property per company.... which makes it kinda look like a "person owning their own home", as a company is a legal "person".
I see why they havn't changed it up until now, and also why I'm not a tax lawyer!! Stupidly complex.
-
@logan (and others): so what happens if they "Sell" to the bank (ie, get forclosed on). And the property sits empty, like soooooo many in the US are, because the bank is not willing to sell at 25% of book value.
Just a thought. It's not all "sell to someone else". And also, what happens to those who dont WANT to buy? or can't?
For example, we rented even when we had investment properties. Made sense for our lifestyle.
-
I wonder how many of the '54,381 homes for sale in February' are sitting vacant, at least temporarily reducing stock until the market can figure out what they are worth.
Post your response…
This topic is closed.