Posts by DexterX
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OnPoint: Election 2011: GO!, in reply to giovanni tiso,
If you raise a tax rate it will come from that income source - if it is wages it will come of your wages - if its is drawings from your business it comes out of your business earnings.
If you are in business you can adjust the business and either chose to absord or pass the increase on - you can structure things so that your net position remains the same.
If part of the the income you derive is from rents and there is a tax increas then that is also able to be passed on.
So I will ask you the same question - where do you think an tax on unrealsied capital gains of rental property will be funded from??
I suggest it will be funded from rents.
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It is my view my opinion of what wuill happen - If you introduce a CGT on unrealised capital, which is to be paid annually, and is in effect a land tax, that tax will get passed onto tenants.
I recall there was a land tax in the 1980s on certain classes of ppty and that tax was passed onto tenants.
I am interested in your view as to where you think that a tax on unrealsied capital gains will come from??
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Your sarcastic "Well it's good to hear” and "the other half million investment property owners have worked out, how to avoid paying tax on property" to me show that you don't have the wit to understand the present position, you also make stuff up..
The present tax position in NZ is that where one owns an asset (nvestment/ppty) from which you earn and income and claim expenses if you sell or convert it (move in/or tsfr it to a company) then if at the time of the transaction the value of the asset is more than its adjusted tax value the difference between the sale price and the adjusted tax value is to be included in your taxable income.
Australia that has CGT allows 2.5% depreciation on buildings, in NZ they removed the depreciation on assets - the effect has been a reduction of the rental stock, particularly in Auckland, and a rise in rents.
If you introduce a CGT on unrealised capital, which is then paid annually, and is in effect a land tax, that tax will get passed onto tenants.
In my view the accommodation crisis in Auckland is acute now - the apartment block where I live which has 29 studio apartments has 4 families of 4, and one family of five renting – A CGT will worsen the accommodation crisis and in my view be paid for by tenants.
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OnPoint: Election 2011: GO!, in reply to Steve Parks,
The point I am making is that penalites are harsh and as a result tax payers don't go out of there way to take the risk to be subject to the penalty regime.
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OnPoint: Election 2011: GO!, in reply to Matthew Poole,
You may wish to refer to this from 2006 - so in 2006 the IRD looked at approx 6,000 transactions.
http://www.guide2.co.nz/money/guides/tax/guide-to-taxation-of-rental-properties/6/601
In 2008 there was a case that gave some clarity to the interpretation of "intent and purpose" and it went in favour of the IRD's position.As I mentioned earlier:
“If the ppty was negatively geared and deprecation and interest were offset against rent. It is up to you to prove the intent and purpose was otherwise – to hold onto the ppty indefinitely – if you are selling a rental ppty where you have claimed mtge interest and depreciation then it is hard to prove.”
Taxpayers involved in rental can also expect to be audited at least once every 7 years where all their returns are reviewed.
Also the penalties for furnishing incorrect returns even inadvertently or making an honest mistake are horrendous and compound monthly. The majority of taxpayers involved in activities that have a high incidence of audits – rentals, running your own business have to file returns correctly and pay tax and that includes paying tax on the gains from the sale of rental ppty.
The penalty regime is so harsh it bankrupts people who make honest mistakes or run into difficulty with the cash flow of their business because some one doesn’t pay them or rips them off – the IRD is a substantial petitioner in bankruptcies.
When Ben says “Not ALL those gains were tax free, just a massive proportion of them”
What is that massive portion – and how much is it. I would have to say it was fabrication.
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OnPoint: Election 2011: GO!, in reply to Steve Parks,
Self Composting Toilet
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OnPoint: Election 2011: GO!, in reply to BenWilson,
After noting that you overstated the case you then move onto say
“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.”
What was the massive proportion of them??
In response to Matthew and Ben,
The IRD Tax guide on rental property provides that if you sell an asset for more than its adjusted tax value the difference between the sale price and the adjusted tax value is to be included in your taxable income.
The IRD with regard to intent and purpose take the default position that the purpose was eventually to sell particularly if the ppty was negatively geared and deprecation and interest were offset against rent. It is up to you to prove the intent and purpose was otherwise – to hold onto the ppty indefinitely – if you are selling a rental ppty where you have claimed mtge interest and depreciation then it is hard to prove don’t you think??
I read somewhere in the press that one year it may have been 2010 or 2009 that the IRD nationally investigated over 6,000 cases of rental property sales to see that the sums were done right.
Ben also states
"Just because you had an accountant doesn't mean you understood what was going on"
Dude I am a finance graduate and have worked in ppty management - both commercial and residential - I know my shit.
To help you know yours I would like to send you a prototype of the SCT Mach II you really, really need one - you can make your own perfumed candle.
Off to the throne room.
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OnPoint: Election 2011: GO!, in reply to Matthew Poole,
Ben posted:
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
So what is the figure here.
The IRD are applying the Act the "intent and purpose" and collecting the increase in values on the sale of rentals property.
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OnPoint: Election 2011: GO!, in reply to Kumara Republic,
They present food for thought - thanks.
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OnPoint: Election 2011: GO!, in reply to BenWilson,
No, i paid waht was required to be paid and had an accountant do the return.
Where is the proof re
"In this country it was a field day, because all those capital gains were tax free".