Yesterday I posted the tale of two houses. House A and House B are both shitters and only 2 square meters different in size. According the financial genius fiscal fool at Kiwiblog these buildings almost always go up in value. Here is where fantasy-land of the financial genius’s fiscal fool come crashing down and also destroys the argument for capital gains tax.
House A: Capital Value of $345,000, Made up from Land at $325,000 and Improvements (buildings for the terminally stupid) of $20,000.
House B: Capital Value of $875,000, Made up from Land at $855,000 and Improvements (buildings for the terminally stupid) of $20,000.
The houses (buildings) according to the government are the same value. The dirt under them however is vastly different in value. One of these houses is just around the corner from my place and a stones throw (by DPF) from the beach. The other is in Whangaparoa. The House in Howick is House B, and is on a street that has houses ranging in value from this one to over $4 million dollars. On this street this is the last shitter, over the last five years as oldies popped their clogs and the houses got sold the shitters have all uniformly been bowled. Quite literally they weren’t worth anything, in other words they were valueless, not going up almost always in value. The land however is where the value is and to pay $1.5 million for a property on Marine Parade and then bowl the shitter and spend $800,000 on a new house making the whole package worth about $3 million is worth it.
So how do you measure capital gains in that scenario. You have gone from $875,000 to perhaps a little under $2 millionin the time it takes to build your new mansion, and the property doesn’t even look the same. One the numbers alone the IRD would say that is a capital gain, now do you charge that on the realised value or the non-realised value. You can’t do either is how. Too freaking hard, and that is but one example.
Far more rational if you want to be a pinko wealth stealer and try and grab more cash is to have a Stamp Duty on housing transactions and match it with the same on shares. If you are a real Pinko then have the Stamp Duty on the Buy and the Sell and pretend they are two separate transactions.
The Tax Working Group should have been bold, instead they were like Speedo Weldon skinny dipping in the Antarctic. What we need is a Tax Working Group made up of advisors that have no financial interest in scoring big government contracts or feathering their own nest who can take a holistic view of our system and start with a blank piece of paper. The group I would have would be analysts from Hong Kong and Singapore and their brief would be design a tax system that assists in generating wealth of individuals and Companies and rewards hard work. That is it.
But no, what we have are mealy-mouthed platitudes from dicky-licking, pocket pissers trying to score contracts for their firm or tossers like Speedo Weldon who wants his shitty little Exchange to be a mover and shaker in the world instead of a flea on the gnats proverbial. Wake up New Zealand our economy is rounding figures compared to economies like China and the US and the EU.
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Don’t hold back Whale, what do you really think?Razork
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Its easy to show the difference in total price is not due to capital gain. Thats what valuers are for. The Council permits would show that ‘improvements ’ have happened. End of story.
A bit harder would be land that had poor acess or was unstable. Spend $100K on an access strip or expensive retaining walls and up goes the value.
Its obvious that capital gain would be less the cost of improvements.
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If the land was worth $855,000 and you build a house (improvements) $800,000
and get an RV of 3 mill.
Where is the extra value?
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we dont need more taxes and regulation in housing. we have a gst and dont want a land tax.
we need business and business investment to be more profitable and less risky.
less government and council, spending and red tape.
more personal responsibility!
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We don’t need any new taxes. The govt gets far more into its coffers than it needs to run the country. National simply need to roll back the unnecessary spending introduced by Labour and then give us a few billion dollars worth of cuts to the existing taxes.
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Marine Pde Howick properties arent worth more than $1 mill unless they are 2200m2. House and land.
Now Seymour Rd And Pleasant Pl are a different matter . One site is worth about $6 mill . The house alone is $2 mill
http://mcc.eaglegis.co.nz/MapViewer.aspx
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Did anyone notice that our living conscience advocated that rather than reducing high tax rates we should be raising tax levels on higher earners. Don’t believe me. check out the latest stupidity to come form the mouth of J Minto.
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What would be a much better exercise is if house ‘values’ reflected their ability to actually be sold, rather than what a Registered Valuer (with an eye to repeat business) tells you it is worth because he wants to keep you very, very happy.
Take, for instance, the $855,000 figure; unless you can produce someone prepared to pay that amount of money, say, at 9 o’clock tomorrow morning, the property value is actually not $855,000 and it is fraudulent to claim it is if such a figure is being used to obtain loans or a Council rates bill or whatever.
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We need far far far less taxes you cunts.
Far far far less.
Zero corporate tax. Zero FBT. Zero trust tax.
And PAYE at say 33% from the first dollar, with a tax-free threshold at say 30K – so every man woman and child is eligible for PAYE but no-one pays more than 10K*.
With Zero corporate tax and Zero FBT – anyone doing anything actually productive can work as a company and pay zero tax for ever. Only losers will be on PAYE.
(*OK for all state servants state school teachers, state nurses etc etc etc, 33% PAYE with zero threshold)
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But Sinner
Who would pay for the no hoper low life that lines up at the shopping center food halls every Thursday?
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nobody. they starve. problem goes away after a few months.
who gives a fuck?
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Elijah, please keep writing this sort of crap. It confirms you really are a no brainer. No brains that is. If you knew even a smidgen of valuation law you would know valuers are constrained to assess only the prices which have been paid by willing buyers and willing sellers for a similar property.
Your ‘nine o’clock tomorrow’ story goes down as sheer fuckwittery. It’s what was paid last week or last month which goes down in a court of law.
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