Thanks to a Taxpayers Union email today, a CGT also taxes victims of
inflation. Here is an example:

In 2027 a property liable for the CGT is bought for $1 million.
In 2040 that property is sold for $2.5 million.

If inflation for 2027 to 2040 is a cumulative 40% then in 2040 terms
the amount paid for the property is $1.4 million, so the real gain is
$1.1 million after allowing for inflation. Will the CGT be levied
against the $1.5 million or $1.1 million?

Now consider a small adjustment. In 2035 house prices reached
unaffordable levels and a gradual decline occurred that is still in
progress in 2040, such that the property sells for $1.3 million in
2040. In gross real terms the property sold at a loss. The CGT is
28% then the CGT liability is $84,000 on a property sold for less than
its purchase price in real terms.

There is a message here that National and ACT need to simplify and get
out in the next election campaign if Labour still proposes a CGT.


--
Crash McBash

--- PyGate Linux v1.5
* Origin: Dragon's Lair, PyGate NNTP<>Fido Gate (3:633/10)

On 2025-10-29, Crash <nogood@dontbother.invalid> wrote:

Thanks to a Taxpayers Union email today, a CGT also taxes victims of inflation. Here is an example:

In 2027 a property liable for the CGT is bought for $1 million.
In 2040 that property is sold for $2.5 million.

If inflation for 2027 to 2040 is a cumulative 40% then in 2040 terms
the amount paid for the property is $1.4 million, so the real gain is
$1.1 million after allowing for inflation. Will the CGT be levied
against the $1.5 million or $1.1 million?

Now consider a small adjustment. In 2035 house prices reached
unaffordable levels and a gradual decline occurred that is still in
progress in 2040, such that the property sells for $1.3 million in
2040. In gross real terms the property sold at a loss. The CGT is
28% then the CGT liability is $84,000 on a property sold for less than
its purchase price in real terms.

There is a message here that National and ACT need to simplify and get
out in the next election campaign if Labour still proposes a CGT.

Thanks for the example Crash. Examples are useful.

Inflation means that you need to adjust the figures. Obvious but not done.
For example the AA is suggesting that the trafic fines are only half of what they were in 1999, so to get relative the fines need to double. A similar
thing happens with tax brackets which get adjusted no often enough to keep
up with inflation.

Even if there is 0% speculation it is fair to assume that the house prices would rise at the rate of inflation, and this would need to be taken into account.

Nation et al, needs to start hammering like a preacher on the list of
Labour's proposal as to why it is not a good idea. For it will take time and maybe there is a chance that Labour will pull the plug on it. If not the
ballot box will have to decide.

There are many groups saying that it is bad and that the devil is in the
detail really applies in this case. NZ does need to take the speculation
fever out of the housing market so that some money can be freed up. Thus allowing the economy to grow.

--- PyGate Linux v1.5
* Origin: Dragon's Lair, PyGate NNTP<>Fido Gate (3:633/10)

On 30 Oct 2025 00:18:49 GMT, Gordon <Gordon@leaf.net.nz> wrote:

On 2025-10-29, Crash <nogood@dontbother.invalid> wrote:

Thanks to a Taxpayers Union email today, a CGT also taxes victims of
inflation. Here is an example:

In 2027 a property liable for the CGT is bought for $1 million.
In 2040 that property is sold for $2.5 million.

If inflation for 2027 to 2040 is a cumulative 40% then in 2040 terms
the amount paid for the property is $1.4 million, so the real gain is
$1.1 million after allowing for inflation. Will the CGT be levied
against the $1.5 million or $1.1 million?

Now consider a small adjustment. In 2035 house prices reached
unaffordable levels and a gradual decline occurred that is still in
progress in 2040, such that the property sells for $1.3 million in
2040. In gross real terms the property sold at a loss. The CGT is
28% then the CGT liability is $84,000 on a property sold for less than
its purchase price in real terms.

There is a message here that National and ACT need to simplify and get
out in the next election campaign if Labour still proposes a CGT.

Thanks for the example Crash. Examples are useful.

Inflation means that you need to adjust the figures. Obvious but not done. >For example the AA is suggesting that the trafic fines are only half of what >they were in 1999, so to get relative the fines need to double. A similar >thing happens with tax brackets which get adjusted no often enough to keep
up with inflation.

Even if there is 0% speculation it is fair to assume that the house prices >would rise at the rate of inflation, and this would need to be taken into >account.

Nation et al, needs to start hammering like a preacher on the list of >Labour's proposal as to why it is not a good idea. For it will take time and >maybe there is a chance that Labour will pull the plug on it. If not the >ballot box will have to decide.

There are many groups saying that it is bad and that the devil is in the >detail really applies in this case. NZ does need to take the speculation >fever out of the housing market so that some money can be freed up. Thus >allowing the economy to grow.

In respect of the dominance of real-estate for small private
investors: this needs to happen and will not change.

For those looking for a house or apartment to rent, your landlord will
most likely be a small investor. Without them, there would be very
few rental residential properties available anywhere in NZ. The
reason why is that said small investors know considerably more about residential properties than they can ever know about most other forms
of investment and none at all where you can fund the major part of a
purchase (if not all) using mortgage finance secured on the property
to be purchased. The attractiveness of this form of investment is
very compelling and will not go away.

While the likes of Sharsies have made other investment options
available to small investors, investors cannot know the detail about a
company or investment fund like they do about residential properties.
Equally Kiwisaver schemes also provide a means of investment for small investors but this is likely to be as well as, not instead of,
residential properties.




--
Crash McBash

--- PyGate Linux v1.5
* Origin: Dragon's Lair, PyGate NNTP<>Fido Gate (3:633/10)