Housing market falls flat ahead of tax announcement - Video

I'm a retired person, a pensioner, who saved hard to own my own home on a wee bit of land on which to grow my households vegs. and a few apples, and also managed to put a little by for a new pair of shoes, maybe a bottle of wine at odd times and more importantly pay for medical visits, and doing more or less as the Government asks, save for old age. Now 'they' are asking to take even more of my limited income. With this new tax no-one will want to buy the place when I sell in a year or two, as I must when the garden gets too much for me, our 'protectors' will take even more. They have family trusts to protect them, we weren't canny enough to do this, or to have been born into one of the many tribes. Yes Maoris will be exempt from this tax, isn't this racist?

I have read up on the proposed land tax and what it would mean to the average home owner and it makes for some very scary reading! This white paper may be found at http://www.victoria.ac.nz/sacl/cagtr/twg/Publications/3-land-tax-ird_treasury.pdf. If my understanding of the proposal/ equations is correct, it has huge implications for the average kiwi.

Original media coverage talked of a land tax of 0.1%; this paper uses figures based on 1%. Agreed, it’s only on the LV of your property, however, if your LV is $250,000 you will have to find an additional $2,500 per annum to give to the government – if you are on a married couple’s state pension that’s 10.2% of your annual income.

As if that is not bad enough, your LV will decrease in value by 16.7%, if you decide you want to sell your property after the introduction of this new tax, your LV is now only $208,250 meaning that your net worth has decreased by $41,750.

Don’t worry the new purchasers will not be penalised as land tax cannot be passed on, so the young couple now buying your property have just benefitted by your hard work over the years, building up your assets and having a nice home! But it’s all OK because it will make home ownership in NZ more affordable for those trying to get on the property ladder as they won’t have to find such a large deposit!

I hope that people wise up to this before it’s too late, it is not a tax that will hit just property investors, it will hurt everybody. Unemployment is now over 7%, where does this leave those poor people who have a mortgage and perhaps over 70% indebtedness, they will now have to find an additional sum for a new tax and they will also be in negative equity.

The flow on effects for business will be to pass on those costs to consumers, if you think that the food basket prices are up now, think what they will be after this new tax. Don’t forget the proposed GST increases and what this will all do to inflation and mortgage interest rates!

Learn to live with it. I live in Aussie and land and capital gains have always been in place here. If landlords try to push too hard their place will be vacant which hurts most no rent or some rent? The best returns over here are about 5%