Posts by BenWilson
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OnPoint: Election 2011: GO!, in reply to Matthew Poole,
which is one of the biggest problems with the law as it stands.
Yes, it seems totally unnecessary to me. If you profited, you profited. Pay tax!
Profit should certainly include some kind of inflation adjustment. If you purchased a house in 1965 for $10,000, and sold it in 2010 for $1.5 million, that doesn't really mean you made $1.49 million profit. $10,000 in 1965 was worth a hell of a lot more than it is now. I'm pretty sure this is how CGT is usually done, definitely it's how they do it in Oz.
Property ownership is still a dream for me, even with a top-bracket job, and my position is very definitely "Fuck y'all!"
Exactly my position. When it's fucking hard even for someone on my income to afford to buy even a cheap property in a poor suburb, I can only imagine how impossible a dream it is for most of the young/poor end of the population. I had to come up with a $60,000 deposit to buy a $300,000 house, which was below the national average price, let alone the Auckland average. That's not easy money to save, even on a high income.
I have been thinking recently that it might actually be worth just getting out of property altogether. Not because it doesn't have great returns, but rather because the entry to it is too rich even for my blood. Do I really need to owe the fucking bank this much money to live in this dead average house in this poor suburb? Wouldn't I be better renting, with all this capital in something more liquid? But it's a hard sell to my wife, because as far as she's concerned, we're living the dream, it's a much nicer house in a much nicer suburb than what she grew up in.
Then I remember the stupid capital growth I've been getting even during a recession, and realize that this is the trap that so many householders have been drawn into in NZ. So long as we continue to believe en masse that this is awesome, it will continue to give awesome returns. Which will continue to price more and more people out of the market, which will in turn makes us feel even richer. But I'm still living in an average house in a poor suburb, and beholden to the bank on a monthly basis, and subject to the winds of interest rate fortunes when it comes to having any disposable income left. It's not really that awesome. It's a strategy that makes nothing, rewards nothing but patience and privilege, and impoverishes our children. Well, actually I mean other people's children, I'm still going to look after my own, in fact they have considerably more savings than I do. Saving is something that makes no sense at all for me, compared to paying down debt.
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Your sarcastic "Well it's good to hear”
Yeah I want to apologize for that, actually, it was unnecessarily personal. You might have had good reasons for not opting to avoid saying that your intention was to make a capital gain on the property. You'd need to go into a lot more detail about your exact reasons for how you organized things. Also, I can accept you aren't a cretin with respect to property. In my defense your tone has been entirely dismissive of many people discussing this subject, but your reasoning has mostly been an appeal to your own authority, and pointing out one tiny part of our massive set of tax laws, reading it as though it is such gospel that it's impossible to avoid. But from the IRD's advice on this issue they pretty clearly say:
"If you’re an investor you buy a property to use it to generate ongoing rental income and not with any firm intent of resale.".
and
"Investors pay income tax on their net rental income but generally not on the eventual sale proceeds of the property. "
Now the terms "investor", "speculator" and "dealer" are labels the IRD applies in conditions they deem fit. They're not the beginning and end of using these words to describe financial dealings. It's quite possible to be labeled an investor by the IRD, and yet to be actually engaging in speculative activity. The whole thing centers around the term "intent", or "firm intent" in this case. This is an extremely hard thing to prove, highly contestable in courts.
Which is why so many (yes, finding out how many would take hours, perhaps days of research. Again, do YOU know the answer?) people don't just voluntarily put their hand up and accept "intention to profit from resale", so they can pay extra tax.
I put it to you that it's not very difficult to buy and hold, but still with the main intention of profiting from the resale - that could just be endlessly deferred, but it's still sitting there as a sack of gold at the end of the ownership, and banks will certainly accept it as basically given, and extend you more credit on the basis of it, which you can certainly use for whatever you want, be it buying televisions or more property.
I don't have any problem with people doing this, I just find the failing to pay tax on the profits part quite unfair. As far as I'm concerned, it shouldn't matter shit what your "intention" was. All that should matter is the outcome - if you profited, you pay tax. Then people can be speculators, investors, or dealers as much as they like, it doesn't matter, they're still going to pay tax. This is the loophole you have been unable to acknowledge has been staring NZ in the face for decades.
It's not the only rort of its kind, either. The other, and much more serious IMHO one is the absence of tax on the family home's capital gain. Again, I think this is unfair and also inflationary.
Oh and carrying on about toilets hasn't done your case any good. It makes you sound a bit nutty. I can accept you're not actually a nut, if you give it a rest.
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What is that massive portion – and how much is it. I would have to say it was fabrication.
Do you actually know the answer?
Definitely they're hard figures to work out, how much capital gain was made in NZ, and how much of it was taxed. My "massive proportion" comes mostly from the observation that most landlords are not dealers, and are not required to pay income tax on capital gains. But it's hard to work out because sensible people who are mostly in it for the gain don't sell. What need is there when the bank will give you easy credit for the capital growth? There's no need to tangle with the IRD, unless you decide to buy your own investment property off yourself.
Dude I am a finance graduate and have worked in ppty management - both commercial and residential - I know my shit.
Well it's good to hear that years of training in finance can enable you to be the first person I've spoken to who has managed to pay tax on unrealized capital gains. Well done. I hope your property management has given a good appreciation of what's involved in showing prospective renters around flats, taught you the ropes of collecting rents, and got you in touch with some cheap plumbers, because it sure hasn't taught you how to do what most of the other half million investment property owners have worked out, how to avoid paying tax on property.
Just as a basic guess on what tax gain there could be, here's a little snippet from the Herald article on it.
Revenue
Capital gains tax delivers tax revenues collected on capital gains. Less obviously, it increases revenues from the ordinary income tax. This is because many taxpayers who would have otherwise tried to convert or characterise taxable income as non-taxable capital gains no longer do so.
The papers provided to the Tax Working Group indicated that a capital gains tax could raise $3.8 billion per year. But in most other countries that have moved to a capital gains tax, the income turned out to be far higher than predicted (almost tenfold over a short period in Australia).
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I look better in clingy things, shaped, well-cut... the kind of thing some people might find 'slaggy'.
I was surprised by how demurely you dressed, TBH, given your claims of unabashed slagginess. I was expecting a tank top, miniskirt and CFM boots.
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OnPoint: Election 2011: GO!, in reply to DexterX,
No, i paid waht was required to be paid and had an accountant do the return.
Just because you had an accountant doesn't mean you understood what was going on. The problem may have gone right back to when you got your investment property in the first place. If you said your purpose was to be a dealer, then yes, you have to pay income tax on capital gains. But why on earth would you do this if you aren't a dealer?
In this country it was a field day, because all those capital gains were tax free
Yes, OK, this overstates the case. Not ALL those gains were tax free, just a massive proportion of them. Anyone who wasn't a property dealer, like you, for some strange reason, opted to be.
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“Not only had it been the world’s worst screw, it had also been violent."
I'm not entirely sure if that couldn't be taken to mean "violent sex" rather than "sexual violence". Do you get the distinction? I don't really get why people like rough sex, but it's not the least bit uncommon. But as you say, this hasn't reached court yet so I'm not too keen to speculate any more about what happened, other than to say it sounds like it could go either way, especially since it will be word against word.
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Dexter, it sounds like you got royally screwed, perhaps you got bad tax advice to become a dealer. You may have paid a lot more tax than you were required to. Or it could simply be the very peculiar situation you put yourself in by buying an investment property and then moving into it caused this. I don't know, but it's irrelevant, your example is atypical. Most people don't pay tax on capital gains, because they don't say making those gains is their purpose in buying the property. But it is. Everyone knows it, the IRD just can't prove it. That's why it's called a loophole, and that's why CGT gets around the whole problem.
Indeed I can't see what you have against it, since you claim to have done the equivalent of paying it. If it was at a lesser rate than your marginal tax rate, you could have saved money.
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OnPoint: Election 2011: GO!, in reply to Matthew Poole,
And you made me. Quite astonishingly poorly reasoned.
I want to live in a New Zealand that rewards those who receive income, pay tax on this income and don’t spend all of their net income, so they have this money left over to built their asset base.
Considering that managing to do all of this is its own reward, his point is really that he want's to punish people who can't. Even though not being able to is also already incredibly punishing without his help.
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you can't consent when you're pinned down or asleep
Asleep, no (unless prenegotiated I suppose). But pinned down? Unless your mouth is also held shut, you can surely say yes or no. And you can struggle to show dissent.
I'm not suggesting I know what happened in the room. But I haven't heard of any intimations of violence or even threats of it.
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OnPoint: Election 2011: GO!, in reply to DexterX,
and stop rolling up perfumed candles
I think it's the smoking of the candles where you should really take a break.
I have not said the sun goes up, so rent goes up
I know, I said that.
You might not have noticed that the sun goes up and down.
Well, if we're being obtuse, actually the Earth rotates, causing that illusion.
Depreciation and CGT are not correlated.
Who said they were?
My point of view simplified to help you understand it is that if the inputs (+ve) to the rent cost equation are increased above the product of that equation, which is the rent people pay, will also increase.
Yes, that is very simplified. It fails to take account that next-to-nothing stops a landlord putting rents up. Doctors bills up? Increase rents. Paying too much for green fees? Put rents up. Oil shocks? Put rents up. Monday? Put rents up. Bored? Put rents up. The only thing that makes a landlord ever put rents down is not getting someone in to pay that rent.
The financial institutions and capital markets have created the shit that lead to the GFC
Yes, and what were they doing that was so nuts? Lending shitloads to property speculators. In this country it was a field day, because all those capital gains were tax free. CGT might have helped slow this down in NZ. It probably would not have stopped the housing spike here but it could have softened it.
I don't know what you're on about with respect to toilets and I don't care. Are you actually sober at the moment?
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