Current tax system unfair for many NZ families
23 March 2010 46 CommentsThe current tax system is unfair and inequitable for many hard-working New Zealand families and the Government will address this in the Budget, Finance Minister Bill English said today.
Mr English highlighted in Parliament how the current system can allow a household earning $100,000 a year, with two dependent children, to reduce the tax they pay from $27,500 a year to less than $10,000 a year.
"In reviewing the Tax Working Group's recommendations, the Government acknowledges the system needs to be fair and have integrity," he said. "This is most apparently not the case at present, where highly uneven tax rates apply between taxpayers with similar incomes."
Mr English said a self-employed person earning $100,000 a year would normally pay income tax of more than $27,500 a year on the top marginal tax rate of 38 per cent.
But, in certain situations, the current system allowed them to significantly reduce their tax bill by, for example:
- Forming a company owned by another entity (on the current 30 per cent company tax rate), paying themselves a $48,000 salary and reducing their tax bill by $3000.
- Qualifying for Working for Families on this reduced salary with two dependent children, they would receive an extra entitlement of almost $8500 a year.
- Using an interest in a leveraged property investment producing, say, tax losses of $20,000 a year, their personal taxable income is further reduced to $28,000.
"At this point, the total tax paid, on income of $100,000, has fallen below $10, 000," Mr English said. "In other words, the effective income tax rate is less than 10 per cent - or lower than the lowest personal income tax rate.
"The example is not uncommon. The Tax Working Group found that 10,000 households were reporting investment losses while also claiming Working for Families credits. We are aware of tax advisers actively marketing schemes similar to this.
"The current system lacks fairness and integrity because of the way income is defined and because different tax rates have proliferated.
"In the Budget, the Government will make the tax system fairer by closing this type of loophole. We will make sure that taxable income more accurately reflects true economic income - and that the system is fairer to all taxpayers."
Tweet#1 - Rajesh 2010-03-25 23:25 - (Reply)
Dear Finance Minister, I am an Engineer with a post graduation in Business Management from India’s most premier institute. I have more than 15 years of business experience at senior management levels in India with large multinationals viz. Ford Motor, Unilever Group. I migrated to NZ 8 years ago to enjoy a better lifestyle sacrificing my successful management career. I have had a very enjoyable stay in NZ in spite of starting from scratch as a “door knocking Salesperson” in 2002. It was a shock from being a CEO to being a salesman. After lot of hard work we have reached where we stand today. But your government, who I voted for and canvassed for, Mr. Finance Minister, has taken away my sleep. I build a career for myself in Property, being the largest ($200 billion) industry. We worked hard as a family earning money to create and support a portfolio of properties WITH IN THE RULES PRESCRIBED BY THE GOVERNMENT. Suddenly, we find ourselves in such a precarious situation where we are threatened with SUDDEN withdrawal of tax benefits leaving us with no way to meet the cash flow. I am shocked at the introduction of such thought process at this stage when our economy requires stimulus to boost production, business activity, jobs creation. At such juncture it is pointless to stop wheels of the biggest industry of the country. If the country needs a change in direction, sure, do it at the right time when the economy is doing well and the shock due to any changes can be borne by the people affected by the change. Today, the entire Real Estate industry has gone backwards. New construction has stopped, houses are losing value, and people are scared. They are trying to sell as much as they can to avoid any adverse effect of sudden change in the policy and the after effects of the same. In whose favor do you think this is? NONE. Loss of jobs, devaluation of our country’s assets, people suffering losses, Mum and Dad losing their own homes due to erosion of equity and so on. Mr. Key, this is not the time to bring structural changes to the Property Sector as the sector is already very weak. China provided their manufacturing sector support to become stronger, India supported their biggest sector “IT” to make it big and we are destroying our biggest sector. What for? For whose benefit? In the past lot of Foreign Investment came in to Property. What is wrong with that? Building financial markets at the cost of another industry does not make sense. Any responsible leader needs to ensure that everyone is protected. Any growth in another sector should not come at the cost of another sector. One class of society should not benefit at the expense of another class. We need to make people richer so that they can afford more expensive properties and not bring the values of the properties down so that more people can afford them. I have not had a single peaceful night from the day TWG report has been published. It is sheer waste of energy and resources in creating a system to rob Peter to pay Paul “in current economic scenario”. These changes were good if done between 2003 and 2006 when economy was strong and could take these shocks. This is the time to put all the energy and resources to create NEW AVENUES of foreign investment into this country. Create avenues to boost production in whatever we are strong at. Who cares if it is “Real Estate”. Please for God’s sake do not let us (who voted and supported you) down. If depreciation benefits are withdrawn and losses are ring fenced from the investment property, I and my family will be ruined. We will lose our house and all other properties that we have acquired “for no fault of ours” as GOVT. had set the rules and we created our portfolio based on those rules. SUDDEN withdrawal of those rules will DESTROY US. If at all, the changes have to be brought, they should be in phases. These rules have been in place from ages. They should be phased out slowly. One option could be to phase out the benefits in next 5 years. A 20% reduction of benefits each year starting 2011 onwards will give enough time for people to manage their affairs. It will not put sudden pressure on rents; it will not put sudden pressure on everyone to sell the houses thereby avoiding a crash. In current scenario, with expected increase in interest rates, we are already expecting big losses on properties. Withdrawal of benefits we destroy us completely. MR. Finance Minister, do not do this to us. We did not vote for you to destroy us. We voted for you with a faith that you will get us out of the mess and make us stronger. YOU have the responsibility of the welfare of EACH & EVERY CITIZEN. You cannot destroy one to make others better. Please remember YOU HAVE THE POWER! WE GAVE IT TO YOU. Do not let us down. Please issue Public Statement tomorrow (or as soon as you can) that • YOU will not let any Property Owner suffer because of sudden change in Policy • YOU will NOT let Mums & Dads come on roads because of YOUR decision to change the Policy STOP the flood of people rushing to sell properties. PLEASE give us confidence so that we can sleep well and concentrate on working hard and adding to the GDP of this beautiful country. I suggest following Action Plan: 1. Create confidence; remove any ambiguity NOW; declare “Status Quo” Benefits: • People would focus on productive work rather than worrying about selling their houses • Govt machinery would focus on creating employment opportunities rather than managing these changes. These changes can be made in future when economy is more robust • Make Real Estate a winner thus producing more work, more jobs, stop migration to OZ, more revenue for the govt. via industries involved in construction, etc. 2. Enforce existing rules – generate more revenue 3. Plug loopholes by creating well defined rules to affect tax on sale of property – generate more revenue 4. Because economy will do well, there will be more opportunities to create bigger stock exchange and better financial markets 5. Actively Invite overseas investments – spare no efforts to get overseas investment YOU CAN DO IT MR. FINANCE MINISTER!
#1.1 - Tim Kemmitt 2010-04-22 09:28 - (Reply)
The recent boom in housing was entirely predicted based on demographics. A large population of successful babyboomers approaching retirement age looking to invest their cash into a safe asset. The boom has gone and will not return until the shadow boom creates a smaller ripple on the pond. Meanwhile punitive measures introduced to reduce investment in property will ensure a housing crisis in years to come.
#1.2 - Frank 2010-05-05 18:59 - (Reply)
I agree with you but I have never and will never vote National,.... I am never surprised by them so there is a slim chance they are stupid enough to do exactly what you fear but i think not.On the bright side.... If they take me down a lot of misguided voters like yourself will be on the breadline with me. BRING IT ON BILL
#2 - Don Babe 2010-03-26 15:36 - (Reply)
Currently property investment is treated like any other business or investment activity. Losses are able to be carried forward or offset against other income if the correct structure is adopted. The planned changes threaten this level playing field. The proposed changes are a response to the Tax Working Group recommendations. That group includes people with vested interests in the finance sector like Mark Weldon. The share market will get a boost from changing the rules for property investments as there is no discussion about applying the same rules to share investments. New Zealanders like property investing because it is direct, the investors choose their own investment and have limited involvement of other professionals. This keeps their funds out of the hands of the scoundrels that have emerged in the finance sector over the past three years. There is a problem with taxpayers getting benefits because of tax losses. Most of the problem rests with the government that has made people earning well in excess of the average wage into beneficiaries. If that is where the problem is, fix that, don't throw the property investor into a discriminatory tax regime. Inland Revenue are already showing some good leadership on pursuing taxpayers that are cheating the tax rules (case Z24 for example) so that process will lead to people applying the existing rules with more caution. If the proposed new rules are enacted investors will be left with only banks as a safe investment option. That will put a lot of power in the hands of a few Australians and a government controlled kiwi. Please reconsider.
#3 - Tony Chen 2010-04-22 16:21 - (Reply)
Dear Dr English We respectfully urge you to reconsider your comments about tweaking property taxes. We have been voters of National party for over 5 elections now, and are active in our own Chinese community groups. You will lost my and my entire families for not just 2011 election but many election to come if you do more than just cut depreciation on building structure - that change is fine. However you will lose a great number of votes, and maybe West Auckland to the Labour Party is you do anything too drastic. Last night on Newstalk ZB you said you needed to tilt the playing field away from property investment. This can be done by tightening regulation on securities, lower costs to companies in terms of prospectuses and investment statements, and making New Zealand a hub for managed funds. These will bring employment in the finance sector and many high paying jobs with higher taxes. We can wrestle business away from Singapore, Hong Kong and Sydney this way too. So to keep us as voters we are watching this election closely - please be careful how much you change the tax laws in relation to property. Only remove depreciation on building structure. Best wishes and work harder to cut excessive Government expenditure that Labour caused in 1999-2008. There are still far too many Government employees. Yours faithfully Tony Chen
#4 - Robert Vruink 2010-04-22 21:04 - (Reply)
Dear Dr English, By now you hopefully you have been advised that much of the information provided to government and conclusions provided by the TWG on property rental property income was either wrong or misleading. Unfortunately many of these "myths" have now entered into the public domain as facts even though in each and every case every one can be disproved. The IRD and the NZ Society of Chartered accountants have both confirmed that rental property does not have a tax advantage over other business investments. The TWG choose to focus on the Tax losses in 2008 due to high interests rates on increasing property prices in that year rather than the tax paid by investors on the profits made in all other years. In fact even the data showing tax losses in 2008 is largely misleading. The big question then is "is the national government willing to change the playing field in order to appease popular sentiment knowing the the myths are false" and in doing so punish those (mostly) national supporters who have used property investment as a means to support themselves into retirement for possibly very little gain in the overall tax take. If so the national party will not only lose my respect but also mine and many other core national supporters votes. I personally would much rather have seen a capital gains tax applied fairly and evenly across all asset classes.
#5 - Pat McShane 2010-04-22 21:14 - (Reply)
Dear Mr English I am writing as a National Party supporter, I endorse the principles of the party and it’s approach to supporting those who try to do their best to be successful in their own right. I run my own business. I take pride in the fact that I have worked hard to be successful and believe I deserve what I have earned. My intention is not to be excessively wealthy but to be secure and comfortable in the future and help our kids and others along the way if we can. One approach to achieving this was to have long term investment in property. The current discussion around tax reform, particularly with regard to ring fencing of property investments is most concerning. There is much talk of ‘fairness’, well I believe it would be most unfair to effectively change the whole playing field in this area. When we started our very modest property investment initiative we had confirmation from all credible sources – IRD, Chartered Accountants and Banks – that LAQC structures were absolutely fine and to progress. It would be incredibly unfair to change this now. Our intention was to take responsibility and look after our own future – as in not be a burden on the state in the future. To this end we got off our backsides and made investment decisions. I acknowledge investment risks of any nature exist, the share market is proof of that, but implementing a ring fencing policy would simply be unfair and in my view ethically unsound given Government Agencies like IRD were actively supporting LAQC type investment companies and how they worked. The purpose of the LAQC that we operate was based on long term investment, the idea being to leverage an appreciating asset that will provide for future security. We considered property to be safe and less volatile compared to Finance Companies and Global Markets and further to this we saw property investment as keeping money in New Zealand and providing a service – people have a roof over their head. As a principal, property is an investment we understand (KiwiSaver wasn’t around) and one needs to be very knowledgeable to invest in alternatives such as the share market – a view not put forward by the share market lobby, but true none the less. I know for a fact there are many ordinary New Zealanders who are in the same situation. The fact is we are not after vast wealth we just want some security in the future – any introduction of ring fencing investments would destroy this hope. Although I’m sure you’re aware of this but an introduction of a ring fencing policy may well have implications for the National government as well. It is likely such a policy would see government responsible for a significant reduction in property values (even for those without investment properties). Banks will put pressure on all homeowners [not just landlords] to pay down debt, as you know, mortgagee sales already high and may double. It is likely there would be increased rents [less supply, higher costs] which obviously would impact on lower incomes. The likely follow on for first home buyers to buy new homes is limited due to rising interest rates, rising rents, and tightened bank lending criteria. This would all be likely to occur as a result of government implementing an investment property ring fencing policy. I appreciate the recession and the Governments desire for a change in tax structure. However, for years we have been told by successive governments that we need to look after our own retirement, which is exactly what we have done – don’t let us down. I would have thought an option would be to make changes on the basis ‘from now on’ and let retrospective situations remain on the basis of good faith decisions made at the time. A final point – I absolutely support the idea of going after people who are obviously abusing the system and behaving in an utterly greed based fashion, taking advantage of the LAQC structure to wrought the system. How about giving genuine long term investors a fair go and help us keep our current investments out of jeopardy. Apologies for the long email, I appreciate you are extremely busy, but please consider my comments before any final decisions are made. Pat
#6 - Jamie 2010-04-22 22:21 - (Reply)
Dear Mr English, I am 31, with a young family and own a mortgage on one small rental property in auckland city which I have held for six years. I currently rent a house and the investment generally breaks even each year. I can't see how decreasing house prices will impact upon genuine long term landlords, only those whose intention is/was to buy and sell at a profit. These people should be paying CGT as it is, but we all know that no-one has ever paid it, and no-one has ever heard of IRD chasing anyone for it. This is unfair. I can't understand why anyone who owns a family home is concerned that their house price might decrease - after all, if you could afford the mortgage yesterday, then you should be able to afford it today? And if you have to buy and sell to upsize/downsize as happens in life, surely every other house in the market has been affected by the same forces, if your house is worth less, then so is the one you want to buy. The current situation with claiming tax back based on losses made due to interest from mortgages is in my opinion, morally wrong. It rewards those who have money (or equity (which has been falesly driven up by speculators)) and makes it difficult (read impossible) for first home purchasers. I am surprised that a National government is considering these changes, but as a National Voter for the last 5 elections, I fully support them, and I am sure there will be many others who do so also. It seems that many here can't see the bigger picture. Selfish greed based in housing capital gains (without actually improving them) that will only lead NZ into more unproductive debt. I encourage you to make a real difference come May 20. Best regards, Jamie
#7 - Jimbo 2010-04-22 22:56 - (Reply)
Dear Dr English, To me something is seriously wrong when young hard working families that can’t afford their own homes are still obliged to pay their fair share of tax while a property speculator with multiple homes can grow their wealth by hundreds of thousands over a few years while avoiding paying their fair share. That’s just not right. I reckon all property investors that have benefitted in this way need to go and find a young family from the first group and buy them dinner and a nice bottle of wine to say thanks to them for picking up the share of tax they know they morally should have paid. The only way for most young New Zealander’s to achieve middle class now seems to be to leave the country they love, live abroad for years and maybe come back one day if and when they have accumulated a big enough bag of foreign loot. It’s a very sad situation for many young New Zealanders like myself who love the country they were born in and would like to live and raise kids here but can no longer afford to stay, due mainly to the insane cost of housing and speculative property mania that has infested this country. It kind of reminds me of the Dr Seuss book ‘The Lorax’. In the story the greedy Once-ler chops down all the trees for profit that once were the homes of the Brown Bar-ba-loot bears. The once happy bears then have nowhere to live so they all sadly leave. The Once-ler then realises in the end, as he sit’s lonely in his old age, the mess he has created and the harm he has done, but by that stage it’s too late and all he has left is his guilt. Please Dr English, please give us a fair tax system and a country that offers a future for young hard working families like mine. Thanks for all the good work you do, Jimbo
#8 - Annon 2010-04-23 07:13 - (Reply)
Dear Mr English, 1) Who will provide housing if property investors do not? If the number of rentals decreases by 100,000 due to the tax changes, who is going to provide these houses? Lots will be purchased by Immigrants, lots by young couples living at home, but there will still be thousands of renters that can't afford to buy, so who will provide houses to them? 2) In Ireland, when they ring fenced property losses, rents increased by 21%! I suppose the government will just start paying higher benefits to those that struggle? Effectively there will be no win to the government from ring fencing property losses! Currently in NZ there are lots of things that are unfair. Are you going to address them too? a) I have no children so I get no working for families, yet other families get over $250 per week. Surely they should have made a decision, can I afford 3 kids, if NOT why should everyone else have to pay for them. Generally you will notice the poorer people have more kids, and the government or other people's taxes are paying for them! b) Thousands of people sit at home on the benefit, sickness benefit, as single parents, and don't work and get paid by the government. Is this fair on the working people? Why should we have to pay for them? Isn't NZ meant to be a free market economy. Why don't we let families look after themselves? Force the decision, "Can we actually afford this child", rather then encouraging, if you have another child that's an extra $XXX so much per week. Why don't we force people of the sickness and unemployment benefits, so say you can be on it for 3-6 months max, then thats it. If you are looking for ways to cut government spending, why not cut the number of MP's to 40, or 1/3rd. Average MP salary $200,000 including perks?, * 80 = $16,000,000. As only 1/3rd of the MP's, then only need 1/3rd of the office space, 1/3rd of the advisors, 1/3rd of the travel spend, 1/3rd of the number of cars. I imagine that this would easily save the $16 million over again! Annon
#8.1 - Meghan 2010-04-26 17:15 - (Reply)
Good on you Annon! You feel the same way my husband and I do. We also don't have children. Even if we wanted them, we know we couldn't afford them. We have made an effort to save for our retirement by investing in property but it appears that property investors are doing too well, so we need to be cut down a few notches to the level of everyone else. Perhaps we should sell up, buy a nice house to live in, travel, then come back and have half a dozen kids we can't afford. The government (i.e. the few remaining working people in NZ) can support us because it's all about the 'family' here in NZ. If you don't have kids you don't matter. If you try and improve yourself or your situation you will be cut down to size. Something needs to be addressed in NZ, but it's not the property investors you should be targetting.
#8.2 - Michelle Fenton-Lee 2010-04-26 19:46 - (Reply)
Mr English - I agree with Annon and Meghan. Again my husband and I do not have children and are trying to think ahead and be able to support ourselves in our retirement via property(so the government doesn't have too)being in our late 30s this is still a while away. We do not get any assistance from the government at any other level other than via the property vehicle. My concern is with the misinformation that has been supplied by TWG. The figures the report talks about are only 2 - 3 years and not lengthy trends over time which is what most serious property ivestors look at. Those that work hard and make good financial decisions are being penalised and expected to work harder to provide more for the other half of our welfare state that choose not to keep themselves. I believe in user pays - let the free market correct itself.
#8.3 - Yogi 2010-04-27 00:12 - (Reply)
Dear Mr English. I think you're doing a great job in general wrt keeping NZ from sinking into the debt hole that a Labour led government would have seen us in. Hey, I've got a pretty good idea THAT'S WHY YOUR PARTY WON THE LAST ELECTION :-) Please read all the above comments well and you'll pick up a very common thread. 'Annon' (apart perhaps from the 1/3 off MP's swipe) and Tim Horsbrugh's comments are particularly worthy in my belief. Don't change the tax laws on property, just police the abusers of the system. Now, talking about abusers of the system... A subject touched on by a few including Annon is those on the welfare system. Naturally we have to have a system in place for those in need etc... and I know you can't turn around a welfare system in a day but this country's (largely Labour initiated) system is a MAJOR BURDEN on our society as a whole. (Emotionally and financially.) Unless we start to turn the welfare system around and stop encouraging the beneficiaries/solo mums (esp the ones who 'choose' not to know the name of the father(s) ) from having more children by giving them more financial benefit for the more kids they have... ALL THE SYSTEM IS DOING IS ENCOURAGING BREEDING OF MORE OF THE SAME PEOPLE. AND THE NUMBER OF THEM IS GROWING EXPONENTIALLY!! They are sucking up the largest portion of the tax-pool that the rest of us are are paying into and this country is going downhill fast on many levels (but esp socially and financially) as a result. Just look at the education and crime stats. Why is so much having to be done to try curb exponential growth of bad news in both these areas... -You don't have to be a rocket scientist, you just have to get real and face the facts. Please Mr English, and the National Party as a whole... CAN WE PLEASE TAKE A LOOK AT THE REAL PROBLEMS IN OUR SOCIETY, and seek to address them, rather than try to put in place a tax scheme that the majority of us can see will have seriously bad implications for the country we (currently) otherwise love to live in. Yours respectfully...
#9 - Lisa 2010-04-23 10:11 - (Reply)
I dont agree with making changes to property taxes. My opinion is that the existing property tax laws should be better policed in relation to property traders. Many Kiwis have been buying and selling properties with the specific intention of making a profit on quick sales. I have been close to this industry for many years and have been constantly suprised how many investors think they dont need to pay tax on trading properties and often think they are allowed to do one a year. I am sure if this area was taxed as it should be then changes to LAQCs and depreciation would not be needed.
#9.1 - Merrin 2010-04-23 15:49 - (Reply)
I agree that watching others who say they are property investors, who actually are traders, not paying tax means that the system is not working as the current law is written.
#10 - Denise 2010-04-23 11:12 - (Reply)
I think that the present time is not right to make changes to property tax. let's get the country back out of a recession and get the property market moving again - Sales are slow to zero out there. The investors have disappeared. Make changes when things are bouyant, not when they are in a slump.
#11 - Tim Horsbrugh 2010-04-23 14:04 - (Reply)
Mr English. I am most interested in your thoughts with respect to immigration and paying for the aging population. Are we planning to follow Australia where they have had a greater than 2% increase in population last year ? (twice that of the national avg). They see the way to pay for the aging population is to grow the working population substantially. If this is where we are heading, then expect the need for more housing in our major cities. Please encourage policy around affordable housing and affordable rents for NZders. Look after the long term landlord with respect to tax changes and do not introduce ring fencing losses. The current tax laws are fine...just police the speculators who are abusing the system.
#12 - matt 2010-04-23 16:38 - (Reply)
Good afternoon Mr. English. May I say that from my observations you are doing a good job so far as Finance Minister. I do not believe however that some of the planned tax changes to property will achieve the desired effect. The proposed ring fencing option will serve only to wipe out a significant number of mum and dad investors whose properties are negatively geared, causing them to rely on public welfare more intensively in their retirement. It will also cause a massive crash in property values as many of these investors go belly up and are forced to sell all at the same time - giving wealthy high equity, high cashflow investors an opportunity to soak up an even larger share of the property market. As it will never cost any less than it does right now to build a house, I can't see the house price crash lasting long - so in the medium term all the ring fencing measure will achieve is to wipe out small investors and advantage wealthy ones. The proposed removal of building depreciation as an expense is I believe a good idea - as it will provide a significant boost for the tax system and probably not hurt investment in housing too much in the process as building depreciation does not represent a massive deduction to most investors anyway. I believe it may also have an unexpected and very advantageous side effect as although investors will be less inclined to maintain existing houses they will rely more heavily on durable building systems such as brick and tile, steel and concrete etc and less on building systems which do not last as long - thereby increasing the quality of homes in New Zealand in the long term. I realize that the intention is to reduce the top marginal tax rate to 30%, but would you clarify for us the effect that you believe these tax changes will have on lower income families? Bearing in mind that the loss of building depreciation as a deductible expense for landlords will cause rents to rise for these families and that the proposed changes to GST will disadvantage them as well. Given that the huge rises in property values over the last decade were caused largely by unregulated lending and property speculation, what do you think about the possibility of introducing considerable stamp duties on investment property (but not on the primary residence) to push speculators who rely on small margins, do not contribute to development or produce anything and have a parasitic effect on the housing market out of the market? This measure combined with an across the board capital gains tax and strong regulation in the finance sector would be a more viable option in my opinion, would you share your thoughts on the matter?
#13 - Peter Ingram 2010-04-26 16:58 - (Reply)
In regards to changing the tax system on depreciation , it should only be changed to reflect parts of a home ie , the house itself , that do indeed depreciate over time , the land obviuosly does not . To abandon such methods as LAQC ,s is to make it more difficult for small investors whom make up the bulk of property owners , that house the majority of the renters ! thus requiring the state to provide housing for these people as it will not be viable for private investors to do so . A situation that the state is historicly ill equiped to do so . To talk of introducing capital gains tax is completly confusing to me as we already have this tax in place ??? All that is needed here is to qualify who is an invester who pays tax on revenue recieved , and traders/developers who buy and sell for a quick return , this surely is not rocket science to work out the differnce ? Lastly , property goes in cycles , it always has and alway will , we have had the boom and now we have the bust and resulting slump , which will last for some years to come , so lets not neejerk react here , time and tides are already weeding out the fly by nighters , so leave the genuine investers alone to keep the masses housed ......?
#14 - Ron Doggett 2010-04-26 19:55 - (Reply)
Dear Mr English, Today I received an email newsletter from Allan Peachey that had a statement about the low quality government spending over the last five years and the over investment in properties. I agree entirely with the sentiments about the low quality government spending over the last five years however the comemnts about the over investment in properties cannot go uncontested. I am a property investor and my exposure in property is greater that what a balanced portfolio should look like. That over exposure is purely the result of the lack of QUALITY investment opportunites in NZ. You do not have to be much of rocket scientist to obeserve the characteritics of the NZ sharemarket. Watch how the price of stocks change before and after a significant stock market announcement and tell me that insider trading is not rife in NZ. Like many other private investors, I have lost significant sums through the collapse of finance companies; I thought I had a well diversified portfolio to protect against a company becoming insolvent. In the aftermath of the collapses, it became very apparent that no diversification could protect investors from the outright dishonesty and greed of finance company executives and directors. Given that both the stock and finance markets are blatantly corrupt, the only investment that mitigated risk was property; it was the individual and force majeur that were the signiifcant risks. Investing in property is a purely defensive action. I agree with your goal of moving investments into more productive sectors but taxing property investors is not the solution. Getting private investors back into the other sectors, they must show that they have changed and have integrity. This means that the regulatory regime must be independent, have teeth and show that they are prepared to bite hard! The current arrangement of the Securites Commission being part of the NZX is not acceptable; the Regulator must be independent and seen to be independent. the financial advisers legislation is a start but only a small part of the complete solution. The current environment where executives and directors who have committed criminal acts yet have all their assets protected by trusts is untenable. If an executive or director commits a criminal act, all assets to which they have access must be open to seizure in the same way as the procedes of other criminal activities. The proposed changes to property depreciation and other taxation will only drive investors from the market. While there may a lowering of house prices, there will be a decrase in the numbers of rental properties available on the market, with the result that rents will increase. This increase will be two-fold; one will be to offset the tax increases and the other will be market driven reflecting the supply and demand for rental properties. To move funds to more productive investments, taxation is the wrong way to do it - the big stick approach. The carrot approach will put a regulatory regime in place for the financial and stock markets that provides real protection for investors and does not tolerate the past practices of these markets. In this way, the private investors that have made the defensive move to the property market can re-enter the stock and financial markets with confidence that they will not be ripped off by the extravagances and criminal actities of the past. Establishing an environemnt of quality investments is by far the best way of attacting investors to the sectors that are nationally the most productive.
#14.1 - Paul Kane 2010-04-26 22:02 - (Reply)
The major forces that are propelling proprty will not be stoppped by a tax change. The baby boomer bubble and the low birth rate, has caused govts to panic and open the sluice gates of immigration, so that New Zealand has taxpayers in later years to fund the development of the country. I have invested in property for my superannuation. Reports show that there will be a lack of housing for some 20 or 30 years to come. Putting barriers up to stop investment in housing will be to the detriment of the country later on as the poorer people pay over the odds for rental accomodation. The taxation changes will just make the return to property even better as rents will go up longer term. The statement that property investors by not paying tax are costing the country 200-300 million in lost tax revenues (or whatever the figure is) doesnt take into account that if investors dont invest money in property the govt of the day will have to invest billions in property to house everyone. In other words the investors are doing a job for the country. Instead of putting up barriers we should be letting the market deal with the shortage. Make other investments look more attractive and perhaps money would flow to these areas. I wont be selling my properties because they are cash flow positive without the depreciation taxation allowance. So I will benefit when rents go up. The return will get better. You dont have to be a rocket scientist to see this happening if there is a shortage of properties due to the Ma and pa's getting out of the market.The porr people who rent will again get it in the neck.
#15 - Allen 2010-04-27 09:59 - (Reply)
If the so called Property Investment scenario is such a tax rort, why not tackle the 9700 odd people who use it to claim the Working for Families benefit, and leave the honest investors to provide housing for people, as any other business.
#16 - Emma and John Clarkson 2010-04-27 11:45 - (Reply)
Dear Minister We would respectfully submit that the information provided by the Tax Working Group to the New Zealand Government is wrong. Only in two of the past twenty-eight years (source: NZ Inland Revenue) did rental property investors make a net tax loss overall. This would have been pointed out if you had a member or two from the New Zealand Property Council or New Zealand Proeprty Investors Federation, rather than a managed fund/sharemarket & out of touch academic group forming the basis of the Tax Working Group - there decisions were poor and came as a result of bias. In terms of retirement options, we are faced with our continually underperforming sharemarket, disgraceful and fraudulently run finance companies and pathetic real returns from term deposits. What choice do we have? Gold, artwork, antiques and stuffing money under the mattress doesn't earn us a passive income that we strive for now we are expected to live well into our 80s if not much later with medical and pharmaceutical advances, and enjoying a higher standard of living every generation. I feel so strongly that like my friends, after at least 10 elections of our family voting National, we may be forced to vote Labour to protect our best interests. Please don't lose the 'unlosable' 2011 election by alienating your powerful and numerous property investor base. Think of all the unitholders in Listed Property Trusts, commercial property as well as residential investment property. Look at what the visionary former Deloitte Consulting partner Paul Kane had to say about the housing shortage, and immense pressure on Housing New Zealand, should landlords be adversely affected by tax changes. And most of all Dr English - please listen to your people. The poll at 79% currently in a large sample size shows that your readers (and by assumption many of them will be supporters) do NOT want tax changes to investment property. We look forward to May 20th and casting our votes in 2011. Kind regards Emma & John Clarkson
#17 - Samuel 2010-04-27 12:07 - (Reply)
Bill's poll on changes to property tax was promoted on www.propertytalk.co.nz (which is the NZ property speculators website). I see they have been very busy over here hitting the "no" button- they must be starting to get very worried that that gravy train is about to be derailed... I say bring it on Mr English- for the sake of the country we need an end to housing speculation. And we also need to follow the lead of the Aussies and control speculation by foreign investors as well.
#17.1 - Sarah said:
2010-04-28 08:10 - (Reply)
Bill's poll on changes to property tax was promoted on www.interest.co.nz (which is the NZ share speculators website). They must be loving the idea of a bunch of newbie investors hitting the NZX and buying overinflated shares. It's hardly productive buying shares from someone who only trades. Not quite the same as investing in a new business venture is it? Ref: http://www.interest.co.nz/ratesblog/index.php/2010/04/22/have-your-saybill-english-signals-tax-reform-to-tilt-economy-away-from-property-to-exporting/ http://www.interest.co.nz/ratesblog/index.php/2010/04/22/top-10-at-10-why-its-time-for-alan-to-hike-holiday-travel-a-human-right-jon-stewart-v-jim-cramer-redux-dilbert/
#18 - Samuel 2010-04-29 14:45 - (Reply)
Ah but Sarah, I would suggest that the people with the bigger motivation to vote repeatedly on this website would be those who have gambled and think that they may now be going to lose. On Property Talk the suggestion was to deluge this website with votes and crash the server!!Out there in the electorate I assure you people are highly sick of property speculators and the majority will be happy to see tax changes. You speculators outbid first home buyers and push up house prices. This increases your capital gains (which is all you people want) but in the process makes some poor person, who just wants a roof over their head, pay for a bigger mortgage. If they can afford a house and mortgage at all. Thus your speculation is someone elses misery. Go start a company with your money- do something productive with your money. NZ could sure use the foreign dollars coming in instead of going out in interest to pay for dollars borrowed to gamble on the NZ property market.
#18.1 - Sarah said:
2010-04-29 16:22 - (Reply)
Aah but Samuel, I would suggest that the people with the bigger motivation to vote repeatedly on this website would be those who have gambled on finance companies and regret not investing in rental property. There are many people on Bernard Hickey’s website who are very irrational in their damnation of rental property. The suggestion on Property Talk to deluge this website with votes and crash the server was made by Dean Letfus. Noone pays him any heed. There may be people out there in the electorate who are highly sick of property speculators, but this group is not the target of the potential property taxes. So that you can make a more informed contribution, real rental property owners supply homes to tenants over the long term and they are not the Speculators/Traders/Developers you speak of. Talk to a real estate agent... they hate property investors because they were always driving DOWN the value of properties with their "80% of CV" buying strategies. Its the emotional buyer who drives UP the price and real estate agents love them. Now for some numbers. There is not $200b invested in NZ rental property, its more like $40b. More than six times as many New Zealanders invest in Managed Funds than rental property. Thats a huge difference but doesn't explain the $100k+ my mother has lost through Vestar endorsed "products". She thought property investment was too onerous. "Could you see me as a landlady back then?" when I challenged her on her hands off approach to investment. Maybe not (just pay for the services of a property manager), but I wouldn't wish her current situation on anyone. The IRD have confirmed that the rental property industry only made tax losses in 2 of the past 28 years. The often repeated loss in 2008 was a blip caused by high mortgage interest rates. In future years you will see that rental property will once again contribute to the tax fund. With respect, you have no real knowledge of the rental property industry and make inflammatory and incorrect statements to enhance your beliefs. Time to take off the blinkers.
#18.2 - Mark 2010-04-30 07:30 - (Reply)
Ah but Samuel, you (like many others) are confusing investors with traders. Traders should be paying tax anyway under current law, but a comprehensive Capital Gains Tax would widen that net and wouldn't concern long term investors. Investors are in it for the income, and we are objecting to the proposal of our income having different tax law applied to it than other businesses. Investors don't "outbid first home buyers and push up house prices", investors are usually the lowest bidders. If it's capital gains we want to target, then lets do that, but why target investors income which in many cases is already fairly minimal?
#18.2.1 - Tony Chen 2010-04-30 21:27 - (Reply)
If the tax changes on property are anything other than just tweaking the timing difference that is depreciation, than watch out for the exodus to Australia.
#18.2.2 - Cristov 2010-05-05 15:32 - (Reply)
It would stand to reason those who have the most to lose would do the most screaming..... your viewpoint Mark bears the burden of compromise it is almost impossible to have an objective opinion while being financially reliant on the outcome. This is not about YOUR pockets ,it's about a correction that needs to take place to create a reality within the marketplace and stop or slow the unsustainable spiral, hopefully averting a disaster for coming generations. it's not about today Mark..it's about tomorrow. The medicine is sh#t,ugly,and unwanted but it is.....necessary.
#19 - Steven 2010-05-01 11:00 - (Reply)
I'm astounded by the incredible bias shown in the commentry made by posters on this page who are clearly property owners. My first response to all posters that feel targeted because the government is considering changes is to simply state the obvious - that systems change and people and business either adapt or die. To imply that you've 'run by the rules' and it would be unfair to change the rules is ridiculous. Rules change all the time. My ACC costs just went up, as did everyone else's, and we've had to accept it because the current system was failing. Previous governments have hiked taxes and lowered taxes because at the time the system wasn't working. Health rules change, education rules change. Change is a constant. We are part of the system and we simply have to adapt. To those property investors amongst you who have adapted your business models to take advantage of any tax advantages available I have to ask - are you investing in property to create a business that can stand on its own two feet or are you simply doing it to get the most you can out of the tax system? No savvy business operator sets up shop with the sole goal to use the tax system to subsidise their income. They grow their business income streams, make their business successful to maximise profit, so they can draw dividends and salary. As a fellow tax payer I am against a system which allows another tax payer to grow their wealth by gaining subsidies from the tax I pay. To those property investors out there who do run their business at a profit and don't rely on the tax system to bolster their cashflows I say good on you. You've taken an risk, built a business model that works, and you are reaping the benefits. For the rest of you, don't try and kid yourselves that you are somehow benefiting the economy by providing people with an alternative to buying their own home. You're leeches living off the backs of other tax payers.
#19.1 - Rajesh 2010-05-19 16:44 - (Reply)
The tax system explained in layman's terms; explained in beer. Suppose that every day, ten men go out for beer and the bill for all ten comes to$100. If they paid their bill the way we pay our taxes, it would go something like this... The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay$59. So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. "Since you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20." Drinks for the ten now cost just$80. The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the$20 windfall so that everyone would get his fair share? They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so the fifth man, like the first four, now paid nothing (100% savings) The sixth now paid $2 instead of $3 (33% savings). The seventh now pay $5 instead of $7 (28% savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings). Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20,"declared the sixth man. He pointed to the tenth man," but he got $10!" "Yeah, that's right," exclaimed the fifth man. "I only saved a dollar too. It's unfair that he got ten times more than I!" "That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? The wealthy get all the breaks!" "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!" The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill! And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier. David R. Kamerschen, Ph.D. Professor of Economics.
#20 - Anonymous 2010-05-01 15:28 - (Reply)
# Depreciation on rental properties is not a cost to the government. Quite the opposite, it in-fact increases government income. Here’s how. Suppose I purchase a rental property for $400,000, 100% borrowed. I rent it out for, say $400 per week. Say improvements are valued at $250,000. House cost 400,000 rent @ 400pw 20800 Expenses -9000 Interest @7.5% -30000 TOTAL -18200 DPN on $250k -7500 Now lets say I am on a salary of $60,000. Salary 60000 Tax 14049.42 Expenses (say) -18200 Total 41800 DPN -7500 TOTAL 34300 Tax 6698.77 So now after my losses on the renal property, I have an income of $34,000 for tax purposes. In this example depreciation accounts for $7500 reduction in income (based on Straight Line Depreciation of 3%), or a tax benefit to me of $1725 ($7,500 @ 23% - the tax rate for income under $48,000) Now lets say that I sell the rental after 10 years. Dpn Benefit so far 17250 Dpn accumulated 75000 Salary 135000 Tax due 43549.02 minus tax on 60000 14049.42 Extra tax over 60k 29499.6 As can be seen the accumulated depreciation is $75,000 and this now has to be added to my income in the year of sale, making my salary $135,000 and tax due of $43,549.02. This is $29,499.60 over and above the tax I should be paying on $60,000. Now over the 10 years of claiming depreciation, I have claimed $17,250 in tax rebates. If we look at the future value of money at say 4% (somewhere around the CPI), the value of the tax rebates is $20,710.53. So now, I have paid back tax on depreciation of $29,499.60, but my rebates only amount to $20,710.53. So in fact the government is better off by $8,789.07 of my hard earned money.
#21 - Mark 2010-05-02 21:22 - (Reply)
Is the government about to strip hundreds of millions of dollars from the economy? The government seems to forget where the money comes from to purchase an investment property. It is not just sitting around in a bank account waiting for something to spend it on. It comes from the equity already saved in a normal family home. John Key and Bill English want this money invested in business instead. I am a mortgage broker who has specialized in helping kiwi's fund investment properties for the last 12 years. I can tell you that my average client is a normal hard working Mum and Dad and they are not on the high incomes that a lot of people expect. Out of the hundreds of clients I have helped to purchase an investment property only 4 or 5 had a significant amount of cash at their disposal to use as the deposit, most is borrowed using the equity in their own home. They would never take the risk borrowing to invest in business or shares. If the government does anything to upset this balance, then hundreds of millions of dollars will stay locked up in existing properties and be totally lost to the economy. Some landlords will be forced to sell or put up their rents significantly. Jobs will be lost in the building industry on mass and the brain drain will continue across the Tasman. Housing will also be in short supply. With investors leaving the market, who is going to build the necessary housing, the government? This will only push up prices due to short supply and add to inflation. Let’s learn something from the Aussies. Both the federal Government and the NSW State Government have already been down this track in recent times and had to reverse it. In the NSW case it was such a disaster it only took about 18 months to be reversed. Australia too is currently undergoing a major review of their tax system at the moment. It’s interesting to note that they have already categorically stated they will not be touching investment properties. The silence from Labour is deafening on this issue. They must certainly be smiling like the cat that just swallowed the canary, knowing how much they will gain from the potential blunder that’s about to take place.
#21.1 - Tony Peters 2010-05-18 04:42 - (Reply)
Do you really thing buying and selling leaky houses to each other is a forward thinking view of how to make the NZ economy stronger? NZ has the higest priced homes (compared to its pathetic salaries/wages) on the planet. I bet you are a baby boomer. You aren't doing renters a favour by having a house for them to live in. If it wasnt for DIY landlords pushing prices sky high more average families would buy!
#22 - Samuel 2010-05-03 10:30 - (Reply)
Mark and Sarah- I don't accept your arguments. Buy to rent people (I'll abbreviate them to BTRs) buy much of the low end property that comes on the market where I live. Anecdotally BTRs can and will pay more than own to occupy buyers. My mother was outbid by a BTRs last year- she just wanted a unit to live in. The unit sold for above RV. This sort of story is pretty common. The real estate market is flat at the moment and agents attribute that to "investors" not buying because of concern over possible tax changes. If there are so many of you out there that you keep the whole market going then you are having a major effect on prices. Housing is a very limited resource and the greater the demand the higher the price. If demand falls and the market is flat enough for long enough then prices will fall also. And virtually no-one buying to rent out in my area at current prices is buying to bring in an income. To buy the cheapest property on the market where I live would cost around $280,000. Most BTRs are borrowing to buy rental houses- with a 20% deposit you would have a mortgage of around $220,000. Over 30 years at 7.1 % your fortnightly repayments would be around $680. This property would rent at about $540 per fortnight so right from the beginning this property is running at a loss. Add in rates and weeks that it is untenanted and the loss runs into many thousands. The figures are even worse with a minimal 10% deposit and many will have paid the least deposit they could. The only reason for BTRs to be buying property at these prices is for capital gain or to reduce their overall tax burden. The correct name for people like this are speculators and not investors. An investment suggests a positive rate of return. If you are in that small minority of true investors that could buy the house outright, then after expenses you would have a rate of return of 4%. You would be better off leaving the money in the bank. It is in the best interests of real investors if the speculators leave the market and prices return to a level at which a decent return can be made. I'm also not sure why you think disgruntled finance company customers are leading the charge against property speculators. People who lost large sums of money in a finance company collapse are hardly in a position to be getting into real estate.
#23 - Samuel 2010-05-03 12:27 - (Reply)
Mark (the mortgage broker- not sure if you are the same as the Mark further up?)- what you have just said reinforces my post above. The people who are borrowing to buy rental property are mostly using small deposits and the income from the property does not begin to cover the expenses- these people are either speculating for capital agains or they are reducing their tax burden. Yes- some people are going to be burned if the rules change. But as Steven posted further up- rules do change and if you stand to lose money you couldn't afford to lose because the tax rules change then you shouldn't have been gambling in the first place. And I don't see how a fall in house prices will send people to Australia. More likely to keep people in NZ- if they can afford a house here then they might see a future for themselves here.
#24 - Michael Sprott 2010-05-06 07:16 - (Reply)
A lot of vested interests here all wanting the status quo to remain. Hardly surprising that someone who has done well out of investing (or speculating) on property is going to want a change to the tax laws that have made them wealthy or better off. How many of you have actually used your own money to invest in housing rather than the banks. Where does that money come from (not NZ) - where do your interest payments go? What effect does that net outflow of funds have on NZ's economic position. What does the constant increase in prices do to NZ's net debt position. How does it improve the lives of future generations of NZers that first home buyers will spend their whole lives paying off an over-sized mortgage to a foreign bank for a substandard house which 15 years ago cost a third of todays prices. Unfortunately almost all of you miss the point. The changes to tax laws proposed are to make NZ a better place to live for future generations and the job of governments surely is to take that long term view not pander to the vested interests of those who are benefitting from a system which channels the countries scant capital into an asset class that produces nothing to increase the overall wealth of it's citizens.
#25 - OllyN 2010-05-06 22:43 - (Reply)
What everyone seems to forget is that people make investment decisions in the certain knowledge that the rules will not be changed. It is totally unfair for honest people to follow the rules then to be punished later for doing so by a change in those rules. It would be in order to change the rules to prevent rip-offs but if it effects honest people ( investors or who ever) it sets a terrible precedent for the future. If you can't trust the rules then you can't ever trust the rule makers.
#26 - Ozzie 2010-05-09 22:05 - (Reply)
I am an Australian but have lived in NZ for about 9 years. I began a modest portfolio in NZ (4 houses now) with a view to long-term holding for future security. I could have also done this in Oz, but I chose NZ in preference to Oz because of a few reasons, but mainly because of no Capital Gains tax in NZ (if/when I want to sell down the track) and the fact that I am able to claim my property losses against my NZ personal income (only providing me with the occasional $2k rebate, but nice nonetheless). If these 2 things were no longer benefiting me, there would be absolutely no reason for me to continue investing in NZ and I would definitely move my money to Oz. The Oz market is wide and (despite what some kiwis might say) its an incredible country that continues to progress at a faster rate than NZ. I am sure that if the NZ property tax rules change a very large number of people investing in NZ would see what I see. I don't want to speculate on what would then happen in NZ (maybe it will be good, maybe bad) but I do think that a lot of money will leave NZ.
#27 - CD 2010-05-11 21:36 - (Reply)
As a National voter(every single election) I feel being punished for have rental property. My wife and I decided to invest in residential property for our future instead of have more kids few years back. We were stupid and regreted now for our investment and voting decisions.
#28 - Jesper Fuhlendorff 2010-05-13 07:48 - (Reply)
As i see it inverters with the skill and freedom to reduce their tax rate to under 10k on a 100k income will find other ways. The casualties of these proposed tax changes will be mum and dad inverters. And with the fall in properties value in the last few years people may well be unable to sell and the value of their investment might be less than the borrowed sum. One thing is stopping loss on property investments to allow a family to receive working for families tax credits but to pull the carpet like this is a bit unfair. As a provider with 5 kids and a wife and a vindictive x wife i will be better of being unemployed and give up my 90k job. I hope you reconsider.
#29 - Mark The Mortgage Broker 2010-05-13 14:43 - (Reply)
Samuel, to help you out "Mark the Mortgage broker", (me) is not the other mark listed above. It is unfortunate that your understanding of owning an investment property is so limited. Owning an investment property is a business and should be treated that way. Like any business there are start up costs but the overall objective is to make money. Very few businesses make a profit from the start and property is no exception. But the one thing you overlook is that property does not stay running at a loss. For example, A property I purchased 15 years ago has tripled in value and the rent has gone up just over 2 1/2 times. It has been cash flow positive for a long time now. Like any business it is making a profit and has to pay tax on that profit. If the government remove tax deductions from investment property then they should no longer be able to tax the profit produced from them. They can’t have it both ways. Well over half of my clients in the past 12 years have purchased land and build new property to have as rentals. Don't under estimate the amount of new housing built by investors in New Zealand. This provides a lot of jobs. If investors leave the market, then what will the builders have to build? If there is a shortage of work then builders will have to look elsewhere to survive, most probably Australia who is predicting massive housing shortages over the next few years. This will also lead to a shortage of property which will in turn force prices up, not down. From the 2006 census figures we see that 82% of landlords are from the private sector, Housing New Zealand is only 13%. If the government changes the rules and discourages private investment in rental property and just 13% of landlords leave the market over time, who will fill the gap? Will Housing New Zealand have to double the amount of housing it supplies, think of how much that would cost the tax payer? Just because your mother was supposedly out bit by a "BTR" last year doesn't mean this is the normal situation for a BTR, it may mean that your mother just wasn’t prepared to pay the market price. I wouldn't be able to count the instances over the last 15 years that I have seen owner occupiers pay well over the RV. For a property investor the numbers need to work, so they don't get emotionally involved with the property. An owner occupier on the other hand will get emotionally involved and pay more than they should. This happened to one of my Property investor clients recently where at auction and owner occupier paid over $90,000 more than the RV on a property they were interested in.
#30 - Elaine Lawson 2010-05-21 08:52 - (Reply)
'A dull uninspired budget lacking in detail. While the Government says it is committed to delivering quality public services, there is no evidence here of a financial commitment to do so. Expect further restructuring, tighter restraints and the steady erosion of public services. Job losses will continue, especially in the public service'. This was distributed to nationwide to many DHBs. Public health, already under pressure, cannot sustain the workload. I have 64 staff and they are already working tirelessly to meet the budget contraints. I worry endlessly about their health from the increased workload and the lack of resources. Public health may be a joke to many but it is a vital and integral part of keeping our community healthy. This budget is disheartening to say the least.
