Monday, June 18, 2007

Capital Gains Tax on investment property

Just read an entry on Rod Drury's blog proposing discussion on Capital Gains Tax on investment property.

I agree that New Zealanders need to be motivated to look at business opportunities more. In the medium to long term Kiwi Saver will help here - employees savings and business/tax dollars channeled into providers more likely to invest in business than property.

With regards to capital gains tax on property, why add another tax to increase the governments already overflowing coffers? Across the board capital gains tax just lowers the property playing field a notch - and would cripple those taking on the highest risk ... the Government needs mum and dad property investors to help provide rental accommodation. With interest rates over 9% alot of investors will already be feeling the pinch. Given the price pressure and buyer competition on entry level housing, how about incentives for property developers to build more at the market entry level to fuel supply rather than making it trickier or even not possible to develop?

How about Housing New Zealand upping their ante e.g. by selling their million dollar homes and using the leverage to provide a bunch more lower end properties?

As a point of reference, Malaysia has recently dropped capital gains tax on property, and has policies in place for developers to include low cost housing whenever developing new properties. Obviously New Zealand and Malaysia are very different animals, but its interesting seeing a country going the other direction with capital gains tax on property!

What are New Zealanders afraid of ... inflation ... or growth!?

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