IRD and Housing
Is there an ulterior motive in all this. Constant recommendations by the IRD as well as the RBI are not being heeded by the present government saying that there is no Housing Crisis. Also, media reporting is making things worse by glorifying house price rises and advocating these rises as normal.
Shouldn’t IRD / Government ensure proper enforcement of existing tax laws (Capital gains) to curb the speculation in the housing market? The onus of declaring the intention when purchasing real estate lies on the buyer and IRD just takes what is declared as Gospel.
We have investors/ speculators owning upwards of 7 houses (recent RBI report –quoted in Interest.co.nz) and these are probably the ones who are ruling / governing the fluctuations in the housing market. One has to witness these happenings at the ground playing level, where the true home owner or first home buyer is just crowded out by investors / speculators. This is blatantly evident by the fact that all houses changing ownership already have tenants wanting to continue renting or in some cases vacant possession, by a builder or trader.
The government’s desire to increase the supply of housing stock to curb house price inflation, is only going to make more houses available for the investors / speculators
Recommending Tax initiatives to curb the menace:
- Effective collection of Tax from capital gains.
- Ring fencing of losses from rental properties.
If there is a feeling that an individual needs an avenue for investment to support his future, then one extra house possession (in addition to the one resident in) could be allowed, without the taxation. while all other sales should attract Capital gains Tax. Also, a mandatory requirement to submit House sale Tax returns should be initiated either at RealEstate Agent Level or Solicitor Level.
UPDATE (18/05/2015) –>