General

Tax isn’t fair – deal with it

Over the next year or so, there could be some huge changes to the way you will be taxed in New Zealand. There are a lot of strange assumptions, which are driving the recommended changes.

Published

14 years ago

March 29, 2010

PropertyBlogs

Over the next year or so, there could be some huge changes to the way you will be taxed in New Zealand. There are a lot of strange assumptions, which are driving the recommended changes. A bunch of “experts” and academics called the “Tax Working Group” have come up with recommendations. However, here I thought it worth going back to one of the basic assumptions – A fair tax.

The headline at the moment is that property investors don’t pay tax, and in fact rort the system by getting tax refunds. This is because if you make any losses in your rental properties (and most of us do because rents in New Zealand are kept artificially low) then you can offset these against your income from a job and therefore pay less Income tax.It is blatantly ignored that you can do this with any business. Property investors (like us) are thought of as greedy “rich pricks” (a term coined by the typically potty-mouthed ex-finance minister Michael Cullen).

Of course, we personally are considered even more evil and greedy because Hubby has a well-paid job. It escapes most people that we worked our arses off to get qualified in order to earn that money. It’s not fair!

So – why do people think it’s unfair that we use a system to allow us to pay less tax?

Because most people have been conned into thinking that Tax is inevitable. Like death. Only it isn’t.

The fact is you do not have to be in anyway rich to legally cut your taxes. You just have to be smart. You also need to get your head round the fact that paying money you earn to someone else is not actually fair, and that the richer you are – the more you pay – is even less fair.

Let’s put it this way:

If someone comes into your house and steals your TV – you go to the police and make a report. You make a claim against your insurance and get the money back to replace the TV.
You don’t for one minute consider it fair that someone has come into your home and taken something that they may not be able to afford, and therefore have a right to steal it from you, because it’s not fair that you had the money to buy it and they didn’t.
And yet – the government takes say 30% of the money you earn, and gives it to someone else. And you think this is OK because it’s called tax.

Here is something else to think about:

While there is no “tax-free limit” to earnings for low income people the way there is in the UK, the bottom 40% of households pay no income tax because they get benefits to compensate.
Yet the top 10% of earners in New Zealand pay 42% of the total income tax take.
If you take out the 40% of people that effectively pay no tax because they get refunds distributed from higher tax payers, we are then responsible for a whopping 76% of the income tax take.

And yet we are the greedy ones for not wanting to pay so much of what we work our butts off to earn. Hell alone knows how much we would collectively pay if we didn’t have a way of offsetting tax.

It’s also worth noting that the HUGE tax benefit that property investors fleece off the government in Tax Refunds accounts for just 1.6% of the entire tax take.

Yep – we are about to get nailed to a cross then burned alive for a whopping 1.6% of the total tax budget – which will then be given to other people. I personally don’t think any of this is going to make that 40% who want our blood any richer.

But I could be wrong.

Over the next week or so we will be going over the recommendations (and they are just that – recommendations) and highlighting what they mean – good and bad.

If you want to see a good and funny illustration of why “tax cuts for the rich” are so wrongly maligned – have a look at this blog post: How tax cuts work.

And for some interesting facts about just how many evil greedy property investors there are in New Zealand – read Are Kiwis really obsessed with property?

And for a light hearted look at just what we personally think of the Inland Revenue (in any country) – take a look at Inland Revenue Humour.

General

Growing Economy Increases Housing Demand

Auckland is New Zealand’s economic hub and with our economy set to continue to grow over the next couple of years demand for housing in Auckland will remain high. Property values in New Zealand have increased by more than 25 percent in 3 years and NZHerald also reports Auckland’s the median house has risen by 46.5% however there are investors buying Auckland residential property for less than market value.

Published

9 years ago

September 21, 2015

PropertyBlogs

Auckland is New Zealand’s economic hub and with our economy set to continue to grow over the next couple of years demand for housing in Auckland will remain high.

Property values in New Zealand have increased by more than 25 percent in 3 years and NZHerald also reports Auckland’s the median house has risen by 46.5% however there are investors buying Auckland residential property for less than market value.

For some investors in the Auckland property market the highly profitable property deals are apparently still out there. PropertyTutors mentoring clients have continued to buy residential property below market value in 2015. This month alone Lauren a new investor under the guidance of mentor Sean Wood bought two properties in 24 hours for less than the market price who would have thought it possible?

Also with demand for property at an all time high, investors like James and Elliot are managing to sell their properties whilst they’re still renovating them. This lowers the investor’s costs as there are no property marketing or listing fees.

Head of Trade Me Property Nigel Jeffries says the latest Property Price Index showed that while the average asking price in Auckland has risen by 20 per cent in the last year, small houses (1-2 bedrooms) had increased 24 per cent and apartments were up a “staggering” 49 per cent in a year.
Trade Me Sales Price Index

As long as our economy continues to grow, demand for Auckland housing in all its forms will be strong.

This blog article was written for PropertyBlogs by Mobilize Mail.

General

Nelson – Hot Location For Lifestyle

Baby boomers particularly those currently living in Auckland may be setting their sights on Nelson and who would blame them. Nelson offers the perfect lifestyle with a mediterranean climate, idyllic nature walks, sandy beaches, culinary delights and of course it’s one the cultural arts capitals of New Zealand too.

Published

9 years ago

July 6, 2015

PropertyBlogs

The house and land packages in Nelson are really too good to be true. Imagine selling your property in Auckland, capitalising on the high property values, and securing a better lifestyle in a brand new home (mortgage free) in one of the safest and friendliest places in the world! This was once a move only the wealthy could afford. Now it’s a reality for so many Aucklanders thanks to the buoyant property market.

The latest annual property sales report showed an increase in property values of 17 percent for Auckland. The average asking price for a property in Auckland starts at seven hundred and fifty thousand dollars, while in Nelson brand new home and land for sale deals start from two hundred and fifty thousand dollars.

Nelson is out of the spotlight and flying under the radar right now, but it may not last for much longer. The property market is on the move in this region with Trade Me Sales Price Index reporting property values up by over six percent during the last property sales season.

Aucklanders in their middle to late years of life will be questioning their current position. They will want to time their move so they can cash in their property equity to create a better lifestyle somewhere else; probably in New Zealand’s answer to the Med – Nelson!

This blog article was written for PropertyBlogs by Mobilize Mail.

General

Weekend Renters Trash Family Home

What can go possibly go wrong renting out your home for short term stays via a very reputable and popular online travel website? For most homeowners it all works out really well. However for this young Canadian couple it went horribly wrong.

Published

9 years ago

May 4, 2015

PropertyBlogs

On NZHerald it was reported the young Canadian couple found out just how bad things can get when they rented out their home for a weekend. While the $875 rent was really attractive and it’s the reason so many other homeowners use the travel website Airbnb to rent out their properties on short stays, for this couple it was too good to be true.

An early txt message from a neighbour on Monday morning suggested not all was well at their home. Their weekend renters had well and truly trashed their home and caused $80,482 worth of damage to the property. Could this have been avoided? Well not entirely but like a goods trading site e.g. TradeMe where sellers and buyers build up a reputation for their trading activities the same applies on sites like Airbnb. Therefore as a renter or landlord you can review the feedback on the interested parties and make your selection based on it. It is unclear whether the Canadian couple took this action.

‘Caveat Emptor’ (buyer beware) is the lesson here – always do your due diligence on anyone interested in renting your property.

Source

This blog article was written for PropertyBlogs by Mobilize Mail.