Re: Capital Gains Tax

Postby nostromo on Tue 12/Jul/11 8:58pm

philstar wrote:
ThingOne wrote:
My house is NOT an investment.


my term deposits are not an investment they are just somewhere safe to put my money ?

Not correct a term deposit is clearly an intent to gain a return. A 'cheque account' or the equivalent is a place to put money to be safe.
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Re: Capital Gains Tax

Postby mudguard on Tue 12/Jul/11 8:58pm

ThingOne wrote:
Wobbler wrote:But why? Why should said slumlord pay cgt but a family living there would not?


My house is NOT an investment. I purchased my house to live in with my family, think of it like buying the family car vs being a car dealer, only the car dealer is in the car business for profit.

A landlord purchases a house as an investment to eventually sell on for profit.

Distinct difference.

I don't know if whether you view it as an investment is relevant or not, surely it's simply an effect?
I think if it were to be enforced (CGT) then there should not be a distinction between the family home. Presumably with your $500k swap example each seller is in the same boat.

I would think any profit should be taxed. I'll still be grinding out a deposit long after this election anyway...
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Re: Capital Gains Tax

Postby philstar on Tue 12/Jul/11 9:04pm

nostromo wrote:
philstar wrote:
ThingOne wrote:
My house is NOT an investment.


my term deposits are not an investment they are just somewhere safe to put my money ?

Not correct a term deposit is clearly an intent to gain a return. A 'cheque account' or the equivalent is a place to put money to be safe.


true, but I was trying to make the argument "that just cos I don't view it as an investment, does not mean it shouldn't be one for tax purposes". but it is possable to view team deposits as safer than cheque, as you can't spend it while on a drunken bender :)
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Re: Capital Gains Tax

Postby Mickyfinn on Tue 12/Jul/11 9:07pm

mudguard wrote:
ThingOne wrote:
Wobbler wrote:But why? Why should said slumlord pay cgt but a family living there would not?


My house is NOT an investment. I purchased my house to live in with my family, think of it like buying the family car vs being a car dealer, only the car dealer is in the car business for profit.

A landlord purchases a house as an investment to eventually sell on for profit.

Distinct difference.

I don't know if whether you view it as an investment is relevant or not, surely it's simply an effect?
I think if it were to be enforced (CGT) then there should not be a distinction between the family home. Presumably with your $500k swap example each seller is in the same boat.

I would think any profit should be taxed. I'll still be grinding out a deposit long after this election anyway...


Interesting attitude and refreshing.... investments is a personal thing and capital gain at least with housing only comes with time unless your are in a high demand area ( auckland) I have noticed that in other areas demand pressure on housing is very low and prices reflect that... so even in the long run capital gain is going to be small.
Mickyfinn
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Re: Capital Gains Tax

Postby Simonk on Tue 12/Jul/11 9:09pm

philstar wrote:
ThingOne wrote:
My house is NOT an investment.


my term deposits are not an investment they are just somewhere safe to put my money ?


Thing is, at a very basic level, we don't really care about your money - it doesn't contribute witty comments on vorb, it'll never go to school with our kids, it doesn't vote. People living in their own home is totally different - and for CGT to fly, the family home will have to be exempt (regardless of how big a can of worms that is).
Simonk
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Re: Capital Gains Tax

Postby Mickyfinn on Tue 12/Jul/11 9:09pm

happybaboon wrote:Yeah true, because Fonterra and dairy farmers are reeeaaaally struggling :lol: I can't believe people are able to make the "most dairy farmers didn't make a profit last year!" claim with a straight face. On paper it may appear to be the case that dairy farmers aren't making huge amonuts of profit. But it's only because they a) had high costs in the form of their investment in new farm equipment like spa pools, beach houses, private school fees for their kids and ferraris or b) overreached during the boom and owe the bank a truckload of money. The ones paying little tax are generally rorting the system hard to avoid as much tax as possible.

I have no problem with dairy farming per se - when it's done clean, it's fine. When it's done with a mind to keeping animals healthy, it's fine. When they pay their fair share of tax, it's fine. Just unfortunately there's way too many cockies who fall down at one or more of those hurdles.

There's very good reasons to tax dairy farmers differently - they don't make the losses/gains like other companies. It's not as simple as money in-money out, because all the money goes through Fonterra. They also demonstrably act toward tax in a manner that is different to most other industries - they're large businesses, and yet are owned by small numbers of people (often one family). Accordingly the fringe benefits are way blurred... Such as does the really nice house that's built on the dairy farm for use by "farm staff" count as part of the dairy farm? How about the 2011 HSV used for going to meet the bank manager? So for dairy farmers who aren't playing fair with the current rules... Screw them. Introduce new, harder to avoid taxes.


the real issue with farming is that it is destroying the environment and as such they should be taxed heavily in that respect..... ATM they are using resources which they clearly don't pay for
Mickyfinn
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Re: Capital Gains Tax

Postby Simonius_Titius on Wed 13/Jul/11 1:55am

The CGT is all about family homes, the lack of it so far is why the NZ property market is so distorted and business capital has to come from overseas.

This stuff about a home being for living in not investment is horseshit except for people who have tons of money and who don't mind losing lots of it.

For the rest of us the decision about whether to "invest" in the most expensive house we can afford to service the mortgage on, or whether to "spend" on rent, or "spend" or the cheapest house we can tolerate and "invest" the rest depends very much on capital gain and tax avoidance considerations.

Traditionally in NZ it is financially prudent to splurge every cent you can scrape together on a property do not intend to be able to pay off before you sell it and resplurge. This is largely a product of NZ's exemption of income from CG from private homes and holiday homes, it is not how much of the rest of the world does it.
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Re: Capital Gains Tax

Postby slumdog on Wed 13/Jul/11 10:25am

ThingOne wrote:
Wobbler wrote:But why? Why should said slumlord pay cgt but a family living there would not?


My house is NOT an investment. I purchased my house to live in with my family, think of it like buying the family car vs being a car dealer, only the car dealer is in the car business for profit.

A landlord purchases a house as an investment to eventually sell on for profit.

Distinct difference.


You may not consider it an investment, but it gains in capital value. The capital gain is there, and we are discussing a capital gains tax.

The only way for capital gains tax to work appropriately is for it to be across all capital gains, including the family home. If CGT comes in and the family home is exempt and the market is good, it would be worth you putting as much money into your home to get a tax free gain as possible, at the cost of investing in other forms that may have CGT on them (active buy and sell), or taxed at source (dividend and interest income), plus it is less productive for the economy (capital tied up in housing rather than invested in business as productive assets). And that is a distortion in the market for captial.

What you use the money for when you sell your house is up to you, you consider there no profit when you repurchase another house, however you ignored the fact the first house gained in value. It gained in value, so you got a profit on the first home.

Dude, I'm just like you, home for my family and I want to keep my gains and not pay tax too. Personally it is not that palatable (selfish perspective) but from an economic standpoint, that is what brains far more intelligent than I (Tax working group) said was needed to address the distortions in the capital market.

My point is that it needs to be a comprehensive all or nothing thing to work correctly.

I guess I'm able to discuss hypothetical/academic/trivial topics with a disconnect from my personal circumstance and what might be best for the economy, and I'm not trying to anger you, I'm very interessted in what you are saying.

I think your points are well made and will be very typical of many people, keep up the discussion!
slumdog
Member for: 9 years 3 months

Re: Capital Gains Tax

Postby slumdog on Wed 13/Jul/11 10:30am

Mickyfinn wrote:
happybaboon wrote:Yeah true, because Fonterra and dairy farmers are reeeaaaally struggling :lol: I can't believe people are able to make the "most dairy farmers didn't make a profit last year!" claim with a straight face. On paper it may appear to be the case that dairy farmers aren't making huge amonuts of profit. But it's only because they a) had high costs in the form of their investment in new farm equipment like spa pools, beach houses, private school fees for their kids and ferraris or b) overreached during the boom and owe the bank a truckload of money. The ones paying little tax are generally rorting the system hard to avoid as much tax as possible.

I have no problem with dairy farming per se - when it's done clean, it's fine. When it's done with a mind to keeping animals healthy, it's fine. When they pay their fair share of tax, it's fine. Just unfortunately there's way too many cockies who fall down at one or more of those hurdles.

There's very good reasons to tax dairy farmers differently - they don't make the losses/gains like other companies. It's not as simple as money in-money out, because all the money goes through Fonterra. They also demonstrably act toward tax in a manner that is different to most other industries - they're large businesses, and yet are owned by small numbers of people (often one family). Accordingly the fringe benefits are way blurred... Such as does the really nice house that's built on the dairy farm for use by "farm staff" count as part of the dairy farm? How about the 2011 HSV used for going to meet the bank manager? So for dairy farmers who aren't playing fair with the current rules... Screw them. Introduce new, harder to avoid taxes.


the real issue with farming is that it is destroying the environment and as such they should be taxed heavily in that respect..... ATM they are using resources which they clearly don't pay for


The article in question for farmers totally ignores the fact most profits from farm entities themselves will be allocated to the farmers/families as shareholder salaries. Many are also set up as trusts and the farmers receive beneficiary income. For these reasons the farms will show little or no profit as they take advantage of the individual having a lower marginal tax rate.

Basic understanding of business accounting FAIL by the investigation.
slumdog
Member for: 9 years 3 months

Re: Capital Gains Tax

Postby slumdog on Wed 13/Jul/11 10:41am

Simonk wrote:and for CGT to fly, the family home will have to be exempt (regardless of how big a can of worms that is).


yep, for any party to get it in, they will have to minimise the impact on the majority of voters for sure. So I think you are correct. I still don't think it is the correct way to do it for the economic benefit/changes sought with its introduction, for that to happen it has to be across the board, despite the fact I don't want to be paying it myself.
slumdog
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Re: Capital Gains Tax

Postby mudguard on Wed 13/Jul/11 12:27pm

I do wonder how the demographic is changing, there is no census this year, so I guess we don't know for awhile. But home ownership must be dropping?

I would love to elsewhere in the country other than Auckland, but unfortunately, like many, it's where the work is. I would be more than happy living near decent trails and a good golf course.

I don't agree with an annual tax on land which I'm confused about, I have not seen this mentioned. Though you could argue that if someone elderly is living in a million dollar house while getting super then surely the prudent thing would be to sell and live in something smaller...
But I digress, CGT on every house sale, it needs to be like ACC and GST, no exceptions.
But at the end of the day, the voter will decide. I guess the trouble with democracy, is what the people want, isn't necessarily the best for them.
mudguard
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Re: Capital Gains Tax

Postby philstar on Wed 13/Jul/11 3:21pm

Simonk wrote:
philstar wrote:
ThingOne wrote:
My house is NOT an investment.


my term deposits are not an investment they are just somewhere safe to put my money ?


Thing is, at a very basic level, we don't really care about your money - it doesn't contribute witty comments on vorb, it'll never go to school with our kids, it doesn't vote.


neither does ThingOne house ?

Simonk wrote:People living in their own home is totally different - and for CGT to fly, the family home will have to be exempt (regardless of how big a can of worms that is).


agreed, but that does not mean it is the right way to do it.
philstar
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"misanthropic"
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Re: Capital Gains Tax

Postby nostromo on Thu 14/Jul/11 9:33am

So treasury think its a good idea too.
http://www.stuff.co.nz/business/money/5 ... asury-head

I support the idea of a CGT specifically for property but not a broader based one I don't think thats necessary.
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Re: Capital Gains Tax

Postby happybaboon on Thu 14/Jul/11 3:04pm

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Re: Capital Gains Tax

Postby E Dogg Capizzle on Thu 14/Jul/11 8:11pm

Looks good to me. :)
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