Capital gains bonus for KiwiBuild buyers

Scoring a Kiwibuild house was already regarded as like winning a lottery, but the prize could be better still with another change by the Government.

Newshub: Housing Minister’s backdown on penalties for KiwiBuild property flippers

Newshub can reveal KiwiBuild has just become a much better investment.

The Housing Minister has quietly softened up the penalties applied to buyers who flip their home.

Documents obtained by Newshub show owners will no longer have to give up all capital gain they make on the house if they sell it within three years.

When Labour announced the policy in 2016, its plan to stop buyers reaping windfall gains was they must not on-sell their home for five years – or else they had to hand all the money they made to the Government.

That’s now changed to if buyers sell within three years, they must give up 30 percent of their profit.

“We really tried to strike the right balance here,” Mr Twyford says.

“We don’t want people cashing in on a potential windfall gain – but on the other hand, these houses are not subsided. People are paying for them with their own hard-earned cash.”

Is this a sign that it was harder to attract buyers to KiwiBuild ballots?

ODT editorial: Cracks appear in KiwiBuild

Kiwibuild, one of Labour’s primary policies, is showing signs of serious cracks.

The key for KiwiBuild and Labour will be winning the public relations battle, on which KiwiBuild narratives gain traction in the coming years.

Labour will suffer if the dominant view is that it is a lottery for yo pros (young professionals) who might be able to buy houses even in expensive places such as Auckland and Queenstown Lakes anyway.

Labour will be on the back foot if KiwiBuild is seen as a windfall for the likes of the graduate doctor and her online marketing manager partner who were the poster couple for the first such houses in Auckland.

And if KiwiBuild is seen as simply rebranding houses that would be built anyway, even apparently good progress towards the 100,000 target over 10 years will be seen as just spin.

It will be detrimental, too, if the view KiwiBuild is a useful hand-up for developers through guaranteed sales becomes the norm.

One wonders, too, if a scheme could have been devised so that potential lottery-like capital gains were ameliorated. Could KiwiBuild have been thought through better so that those buying at a discount would also have to sell at a reduction, the difference going to the next first-home buyer. Or the initial discount on market price would be returned to the government when the houses were sold. Although this has been achieved overseas, policies such as KiwiBuild can become mired in complexity.

Labour must be hoping the issues with the shaky start to KiwiBuild can be patched over, that it really can deliver lots of new homes and ease the housing crisis.

Crucially, it must hope its narratives gain purchase and the public can be convinced the scheme is positive with wide public benefits.

KiwiBuild was a ten year plan, but if it looks like a shambles in eighteen months time it may make the  2020 election campaign challenging for Labour.

 

Ardern on Capital Gains Tax

Jacinda Ardern has just been pushed to clarify Labour’s position on Capital Gains Tax by Guyon Espiner on RNZ.

“The government imposed a capital gains tax, they just haven’t called it that.”

That’s not correct. The current government have imposed a 2 year bright line test, but that has just toughened up the tools to enforce existing tax on capital gains if properties are sold for the purpose of capital gains.

“I’m not going to wait until another election before acting on the findings of the Tax Working Group. I reserve the right to act”

“We do not compare well internationally, we’re one of a handful that do not have taxation in this way.”

“I am happy to rule out CGT on the family home.”

Regardless of what a working group may recommend, but she won’t rule out a CGT.

“This is a matter of principle. We do not have a fair taxation system in this country.”

 

Cunliffe and Parker repeat claims on property speculation

Both David Cunliffe and David Parker have repeated claims that capital gains on property speculation is not taxed. They are wrong again.

David Cunliffe in speech to Young Labour:

We have too many children who are getting sick because they live in cold, damp, cramped houses with black mould growing up the walls. Sometimes owned by speculators who just push the rent up while getting rich on tax-free capital gains.

David Parker on The Nation:

“You need to tax the speculators….capital gains tax”
“Loan to valuation ratios would not be needed if they were taxing speculators and building affordable homes.”
“National Party, despite the fact that we had 40 percent house inflation, they’re not doing anything about it. Not taxing speculators…”

Inland Revenue:

Dealers and speculators must pay income tax on any gain they make from reselling their property.

Cunliffe has made similar claims several times this month, including in Parliament. He has been corrected.

Parker has made similar claims over the past year, including multiple times in Parliament, He has been corrected multiple times.

It can’t be through ignorance.

It looks like deliberate attempts to mislead the public.

Details at Politicheck: Property speculators are taxed