Comments around Capital Gains

Question from Andrew updated on 3rd August 2009:

Why is it that there has been an amazing absence of comment on the National Party statement that they are looking at not taxing the property home but are looking at taxing one's investment property? Should we be selling up immediately or should my wife and I be separating at least legally or should we be crossing our fingers and waiting to see what happens? To be serious the property we currently hold is according to the body corporate rental only not owner occupier so separation is not a real option? What do you recommend or are you crossing your fingers too?

Our expert Mark Withers responded:

No lack of comment from me Andrew, see my letter to the editor published in the Herald last month that went to print with the heading "Taxing Property is a Political Trap" In all seriousness though, we simply don't know yet what is comming. Change is clearly in the wind but the tax working group hasn't even presented it's findings to government yet so we are a long way from seeing what the government will adopt. Even further away from looking at tax planning measures.

Capital gains tax and ring fencing seem now to be further down the list of possibles than land tax or chopping back of depreciation allowances. Whilst I accept knowbody in property wants anything to change it might be a case of having to accept something and I for one would breath a sigh of relief if they don't ring fence tax losses and don't introduce CGT. Remember with CGT though that it is potentially far wider than just property it could well apply to shares and other assets too. Even land taxes have huge political problems, would you levy them on farms? How about land that has been passed to tribal interests as treaty of Waitangi settlements? The challenges are large. The only positive is the promise to reduce the high marginal tax rate at the same time which would be a welcome move for many. Only time will tell and I suspect you can rest assured there will be plenty more comment as the proposals develop. 

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.



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