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Tax Property Investors?

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Contributor:
Brian Dalley
Brian Dalley

Should we or shouldn’t we? I guess for those that haven’t invested in property the answer would be yes, tax the hell out of them they can afford it, and on the other side of the page you have investors saying no, we are already over taxed.

It was reported that the Treasury Secretary John Whitehead said it's time to address a long standing issue of taxing capital gains from property investment. I believe he went on to say, capital gains, or property taxes, would encourage investment into productive activity. Unfortunately he didn't mention what type productive activity he was referring to. Many will disagree with Mr Whitehead and be baffled by his statement as the building industry is the largest productive activity we have. Well if not the largest it is way up there.

Really, the fairest way to increase tax’s is to have more people paying it, not by over taxing those that strive to get ahead.

There has been a long standing dispute over the issue of capital gains tax and it seems to always rear its head at the worst possible time.

We are in a recession Mr Whitehead, do you honestly believe taxing property Investors is the way out? Or would it drive more investment offshore.

I was told last week Housing NZ are not buying but rather leasing instead, which makes good business sense.

My advice to Mr Whitehead, and I am happy to debate this with him, is to INCREASE TAX BENEFITS for property investors, and to sell some of its older stock like they did a few years ago to property investors.

Housing New Zealand should not invest in housing as they can’t benefit by doing so. Much like in industry, the big items are leased so as not to tie up to much capital.

My phone has been running hot for the past six months from people wanting to invest in the residential market as they see properties in the current climate ripe for picking. And I must say in a number of areas they are absolutely right.

In all the time I have been in this business I can not recall a time when building prices plummet. So my point is, if you invest on todays market in a property that is below replacement cost wouldn’t you expect it to increase in value over time due to supply and demand?  As there will only ever be a set number of properties in the lower market, basic economics would suggest so.

When talking to people the name Blue Chip comes up and I feel for those people that got hoodwinked, but in saying that, there were a number of red lights flashing that many took no notice of. My advice for them is if you still can, jump back on the horse as soon as possible. This time make sure it is the right horse for you.

Housing New Zealand don't operate like other schemes in the private sector, which makes investing with them a no brainer. Have you ever heard the saying, “Race cars win only if you drive them under control”. With a 10 year lease, guaranteed rent whether the property is occupied or not, it is a very good vehicle to be in.

Just sit back, relax and let the tenant and the Government repay the mortgage and as for capital gain, that is icing on the cake. And should the government take the icing away, investors will just look for another cake.

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