Latest / Early Edition with Ryan Bridge / Matt Ball: Property Investors Federation Advocacy Director on the people selling their properties ahead of the election due to capital gains tax fears

Transcript

Matt Ball: Property Investors Federation Advocacy Director on the people selling their properties ahead of the election due to capital gains tax fears · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Let's look at Labour's capital gains tax in light of
• 0:02
  Speaker 1: this new cotality data. It shows us that thirteen percent
• 0:05
  Speaker 1: of house houses in New Zealand sold for a loss.
• 0:08
  Speaker 1: This is the worst profitability that's inverted Commas since twenty twelve.
• 0:14
  Speaker 1: You might need to hold on to your investment property
• 0:16
  Speaker 1: for an entire decade to make anything back. Matt Bull,
• 0:18
  Speaker 1: Property Investors Federation Advocacy manager with me this morning.
• 0:21
  Speaker 2: Matt, Good morning, morning Ryan, thanks for having me on.
• 0:25
  Speaker 1: Good to have you here. So yeah, look, no surprise
• 0:27
  Speaker 1: that it is getting harder to sell and when you
• 0:30
  Speaker 1: do sell you might be taking a loss. What has
• 0:32
  Speaker 1: this got to do with the capital gains?
• 0:36
  Speaker 2: Okay, so the data here is pretty good, but it
• 0:39
  Speaker 2: doesn't tell the whole picture. Totality data looks at a
• 0:42
  Speaker 2: sale ten years ago and then a sale today and
• 0:45
  Speaker 2: compares the two and you get the nominal profit or loss.
• 0:48
  Speaker 2: It doesn't take into account the cost of owning the property,
• 0:51
  Speaker 2: your upgrade costs, and all of that sort of thing.
• 0:53
  Speaker 2: But most importantly, it doesn't take into account inflation, and
• 0:57
  Speaker 2: inflation over the last ten years is about thirty nine percent,
• 1:02
  Speaker 2: So it's probably worth putting some numbers on this. And
• 1:05
  Speaker 2: actually I've got an example right in my neighborhood. Some
• 1:08
  Speaker 2: neighbors who bought a property in twenty fifteen for six
• 1:10
  Speaker 2: hundred and fifty five thousand dollars thanks to inflation, selling
• 1:15
  Speaker 2: now they need to make nine hundred and eleven thousand
• 1:17
  Speaker 2: dollars to make a profit. Now their asking price is
• 1:20
  Speaker 2: eight hundred and thirty five thousand, So they're going to
• 1:23
  Speaker 2: make a nominal profit, but in real terms, they're not
• 1:25
  Speaker 2: making anything. Now where that comes in for labour's capital
• 1:28
  Speaker 2: gains tax is labor is going to be taxing inflation,
• 1:33
  Speaker 2: and that means you make a paper profit, but you
• 1:37
  Speaker 2: are going to be taxed as if that was real income,
• 1:40
  Speaker 2: really rubbing salt into the.
• 1:42
  Speaker 1: Wound, except that their tax doesn't come in until what
• 1:45
  Speaker 1: twenty twenty seven, right, any increase in value post twenty
• 1:49
  Speaker 1: twenty seven.
• 1:51
  Speaker 2: Yeah, But that's not the point, Ryan, See. The point
• 1:53
  Speaker 2: is from that point onwards, it doesn't matter whether you
• 1:57
  Speaker 2: actually make an actual profit or not. You're going to
• 1:59
  Speaker 2: be tax on inflation. Yes, but I said those tax
• 2:02
  Speaker 2: comes in we look back in ten years time, this
• 2:05
  Speaker 2: is the picture we're going to see.
• 2:06
  Speaker 1: I understand what you're saying, but I think that, you know,
• 2:09
  Speaker 1: to be fair to them, you can as an investor
• 2:13
  Speaker 1: make a decision around that, you know what I mean.
• 2:16
  Speaker 1: You can say, all right, well, I know these guys
• 2:18
  Speaker 1: are coming in. Well, these guys might be coming in
• 2:21
  Speaker 1: and they will be doing this from twenty twenty seven.
• 2:23
  Speaker 1: Therefore I'll organ my eyes my fears around basically getting
• 2:26
  Speaker 1: out of property potentially.
• 2:29
  Speaker 2: Well, that's one option. I mean. The other option is
• 2:31
  Speaker 2: that labor makes an allowance for inflation, and that would
• 2:33
  Speaker 2: make the tax fair and I think people would understand that.
• 2:37
  Speaker 2: But yeah, you're right. The other option is that people
• 2:39
  Speaker 2: adjust their affairs accordingly. And I'm afraid, Ryan, I think
• 2:42
  Speaker 2: this would put a wrecking ball through the rental market.
• 2:44
  Speaker 2: People will just stop investing in rental properties because of
• 2:49
  Speaker 2: that worry that they're going to be taxed on inflation.
• 2:52
  Speaker 1: Have you heard of anyone lately who's been trying to
• 2:55
  Speaker 1: sell their rental property? How is it out there?
• 2:58
  Speaker 2: It is tough, And yes, I'm here people all the
• 3:01
  Speaker 2: time who are selling mental properties. Some of them are
• 3:04
  Speaker 2: worried about the election and are actually getting out ahead
• 3:07
  Speaker 2: of the game. Others are just sitting tight and watching
• 3:10
  Speaker 2: a bit nervously, so yeah, definitely subdued in some parts
• 3:15
  Speaker 2: of the country. As always, it's better than others. So
• 3:18
  Speaker 2: if you're in Auckland or Wellington, things are pretty tough
• 3:21
  Speaker 2: and if you're in parts of the country like down South,
• 3:24
  Speaker 2: things are a bit better.
• 3:26
  Speaker 1: Matt. Thank you. Always going to Chat Matt Ball Property
• 3:28
  Speaker 1: Investors Federation for.
• 3:30
  Speaker 2: More from earlier edition with Ryan Bridge.
• 3:32
  Speaker 1: Listen live to news talks there'd be from five am weekdays,
• 3:36
  Speaker 1: or follow the podcast on iHeartRadio.