Good evening ladies and gents,
Now is just one more time when I pick your brains for some ideas and clarity. Hopefully these questions wont be too difficult and not take up too much of your time.1) Is it true they don’t have capital gains tax in NZ? Does it exsist in any instance? Is there anything to stop me buying a place putting 20K worth of repairs/improvements into it, using the improvments and time to gain 40K worth of equity and selling for a quick buck? even after selling costs?
2) Off the topic above. I have about 4 properties that interest me in NT that i’m thinking about investing in. They are within my price range, and I think I could get decent rentals. Basically I’m just looking for a property that wont cost anything out of my pocket to run, even if it is with an interest only loan. I’m not over fussed with capital growth, more concerned with vacancy rates. Is this too basic a goal? Can I just put the questions of rent, vacancy and capital growth to the real estate agent? Is there something wrong with just saying to an agent, “I’m looking for an IP, under 190,000, positive or evenly geared at 6.07% interest, low vacancy rates”, or don’t agents like doing the leg work? Is there anyone else I could approach that could provide these answers? I don’t want to leave my comfy beanbag and fly from Sydney to NT.
3) Has anyone had any dealing with purchasing options to buy, for units off the plans with a long settlement term (ie when the unit is completed, like 1 yr), and then selling the option before that settlement date for a profit? I have a bit an idea brewing, and would be interested in your thoughts.
Thank you one and all for an advice. I realise time helping others is time taken away from your acheiving your investment goals.
Good Luck.
Wild.Hi
In addressing point 1) I believe it has to do with purchasing intent in NZ.
i)If you purchase a property with the intention of a quick reno and flip, then you are deemed to be a property trader and the property in question is treated as ‘trading stock’ and income tax is payable.
ii) If you purchase a property with the intention of holding it as a long term buy and hold, then there is no capital gains tax payable.
How you prove what your initial intent is/was, I’m too sure.
I read somewhere that some investors make a stat dec when purchasing stating ‘Property X is purchased for the purpose of a long term rental etc etc’ in order to cover themselves if they change their mind after purchase and the IRD (Tax Office) coming knocking at their door.
What time period constitutes a long term buy and hold and also what happens if the intent changes once purchased, I am unsure of as well.
Hope this little bit of info helps
Cheers
David U
To further add to Davids comment. The IRD checks with the Land Transfers department to see if you are fliping property. It is not easy to hide these types of transactions.
Tamara
Hi everyone,
If you are considered to be a property trader by the IRD then, yes, you will have to pay capital gains tax. A good way to avoid this is to have a good company/trust ownership structure to avoid attracting their attention, and this has worked well for me. Also, living in the property while it is being upgraded should avoid you being considered a trader.
Hope this helps
Thank you all for that. I think I’m going to look into the idea of getting around capital gains in NZ, which unfortuently means boring tax sights no doubt. I’m sure there will be a way. If any one has any other ideas, please let me know. Otherwise I’ll be living in a half finsihed house in frosty New Zealand soem time soon.
Wild.Hi wild nothing
2) Off the topic above. I have about 4 properties that interest me in NT that i’m thinking about investing in. They are within my price range, and I think I could get decent rentals. Basically I’m just looking for a property that wont cost anything out of my pocket to run, even if it is with an interest only loan. I’m not over fussed with capital growth, more concerned with vacancy rates. Is this too basic a goal? Can I just put the questions of rent, vacancy and capital growth to the real estate agent? Is there something wrong with just saying to an agent, “I’m looking for an IP, under 190,000, positive or evenly geared at 6.07% interest, low vacancy rates”, or don’t agents like doing the leg work? Is there anyone else I could approach that could provide these answers? I don’t want to leave my comfy beanbag and fly from Sydney to NT.I would just say that why not ask, if you get a good agent they will help you, conversely you know the answer
]However, I would say that you should still know the numbers yourself, because there is no one more interested in your interests than you. Meaning the agents can afford to be sloppy with the numbers ’cause they aren’t payin’ for it.
But seriously you need to know if they have presented you with a truely good deal.
Good Luck in NZ & NT
Leigh K[
]Read, learn, grow but most of all just do it.
]
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