Has Capital Gains Tax become law?
Question from Michael updated on 20th November 2008:
Our expert responded:
You are correct, there is no capital gains tax in NZ. Your family member's accountant is referring to the effect of depreciation recovered, and this only arises when an asset is sold. When an asset is sold, the selling price is compared to the depreciated value of the asset. If the selling price is less than the depreciated value of the asset, then there will be additional tax loss to claim. However, if it's more (as is often the case with residential investment property), then that means too much depreciation has been claimed and it needs to, effectively, be paid back. At the end of the day, you are getting the property at a discount, and I would be grateful for that.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.