Mallard gets it right on Capital Gains Tax

hat tip Keeping Stock

It isn’t often that you will hear me praise Trevor Mallard but on the issue of capital gains tax he get’s it pretty much right:

There is currently a tight housing rental market in New Zealand and especially in Auckland. The tightening up of the tax approach around property owners liability for tax on capital gains is already pushing some landlords out of the market and causing rents to go up. Both TV channels have reported on this recently.

Landlords are making it clear that it is their intention to recover their extra costs (write off forgone). Of course they won’t be able to do it overnight – but they will over time.

Far be it from me to disbelieve Labour’s campaign manager on the issue of capital gains tax. I wonder if Trevor was included in the planning around capital gains tax. One would presume not given Labour’s new enthusiasm for the tax.

 


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • peterwn

    The same basically applies for commercial property. Few businesses own their own premises, the number of owner-occupier businesses in Queen Street can probably be counted on the fingers of one hand. Trevor is right – landlords would take a one shot loss in the short term, but it comes right in the longer term. The ‘smart money’ loves such ‘disruptive’ changes – they can make money on them. That is why some business people support Labour.

    • abjv

      owner-occupier busi­nesses in Queen Street I presume you mean Queen St Auckland. You’d count it on the thumb of one hand. I understand there’s only one.

      Trevor is right. Landlords will either look at longer term recovery of the cost (not good news for renters) or will bail (not good news for property prices if you presently own a house and you’ve got a 90% mortgage).

      Time for some slogans?
      Rents are higher under Labour
      Got low equity in your house? Wait until Labour have finished with you
      Phil’s Impossimaths: Everyone gets a tax cut and we raise $4B more

  • Mallard is quite right. Landlords will quit the market, and rents will rise if a CGT is imposed. And who will be the biggest losers? A chunk of those whom one would expect to support Labour.

  • arnie

    Easy way to stop the CGT in its tracks is for property owners to put up the rent NOW, in anticipation and when the renters vote against labour drop them back after the election when the Nats are returned. Simple

  • arnie

    And of course you could always sell a property purchased at the peak a couple of years ago to your BIL or some other distant rele at a loss, get 15% back and then repurchase later at cost. Easy. After all if they are going to tax gains they will have to refund on losses.

38%