Labour will tax the family home – when you die!

September 4th, 2014 at 7:00 am by David Farrar

Something that many people have not realised is that the so called exemption on the family home for Labour’s is temporary. Almost all family homes will be taxed on their capital gain, when you die, if not placed on the market immediately.

Most people now die in their late 70s or 80s. Their kids will tend to be in their 40s or 50s and hence have homes of their own. So when you die, it is very unlikely a child will move into the home. They already have one. Plus few people want to live in the home their deceased parents lived in. So the home gets sold. And guess what? Labour will tax any capital gain on that sale.

It’s almost a de facto death duty – you get taxed for dying!

UPDATE: You can avoid the death duty if you decide to sell the home within 30 days of your parents dying. Charming. At a time you are mourning, you will be forced into rushing the home onto the market to avoid the death duty.

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196 Responses to “Labour will tax the family home – when you die!”

  1. freedom101 (510 comments) says:

    What the bold print giveth, the fine print taketh away. Drilling down on Labour’s CGT will be a dance of the 1000 veils, and will gradually kill Labour. DPF – when posting items like this, can you please reference or quote the source document so that it’s on the record, otherwise Labour will just change their policy on the hoof to evade accountability.

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  2. Souvlaki (45 comments) says:

    Nothing ” defacto”about it!! Lets be honest & call it what it is… a death duty…which has always been close to the heart of the left. It was always a favourite option Anderton wished to bring back!!

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  3. IGM (527 comments) says:

    Newstalkzb should be dumped . . . another morning of protection for sleezy Parker and pathetic Cunliffe for stuffing up their tax of envy (CGT) intentions. Why should we be subject to constant pro-Labour crap from media . . . it is a bloody disgrace. Combined with that piece of s..t on Tv3 Campbell, it is going too far, even worse than Armstrong.

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  4. redqueen (583 comments) says:

    I have pointed this out on several prior occasions. However, my expectation is that you’ll just retain the property as a rental, further reducing affordability / housing availability. If your parents leave you with a debt-free property, you’d be bonkers to sell it, take a massive CGT hit, and then have to re-invest the money in something else (which they’ll end up taxing as well). Instead, you can just turn it into a rental, and even leverage it to buy 4 – 5 properties. This is what you call the ‘Law of Unintended Consequences’.

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  5. KJ (3 comments) says:

    Hidden due to low comment rating. Click here to see.

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  6. Inthisdress (300 comments) says:

    Hey David – you are now officially an ‘Attack Dog’ when I had you down as a border collie.

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  7. redqueen (583 comments) says:

    Also, DPF, the fact that a CGT would end up being an effective death duty is one of its main flaws. And this is a major flaw, as a ‘broad-based’ CGT would be worse.

    Labour have actually said that CGT will only apply on disposal and that things like the ‘family bach’ will not be taxed until disposal. This means that, over several generations, you could end up with property which will never effectively be disposable (think, your grandfather bought a bach, and now suddenly you’re looking at a tax bill at 15% on 95% of the unindexed value).

    Then you get all the wonderful complexities of a CGT, the sheer quantum of administration and compliance that will be required, and all the headaches of paperwork, valuations, etc. That all is further compounded by the sheer flexibility of revenue generated (Labour bangs on about the government not getting its forecasts right, yet they want to introduce a tax which is subject to significantly greater fluctuations).

    I ask, why not just let sleeping dogs lie? I understand tax-base broaden has its advantages, and agree, but I really would recommend looking at a property tax (preferably on area/size, rather than value) before embarking on something as complex and open to problems as a CGT.

    Sorry for the long comment, but having worked in administering CGT before (for my sins), I would specifically caution against it and one of the reasons I moved to NZ was to escape such madness.

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  8. Harriet (5,132 comments) says:

    And what voting segment would actually vote for a reduced inheritance?

    The elderly? – middle aged? – 30 somethings? – first time voters?

    I can’t believe Labour would be this fucken stupid.

    ‘grand child poverty’ :cool:

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  9. J Bloggs (250 comments) says:

    Redqueen – except when the house is left to multiple children, and one of the parties wants (or needs) the cash from the sale of the property – would one of the children buying the house off the rest attract the CGT?

    Take our situation – My mother in law died and left her house she’d lived in for 40 years (in a part of town that has appreciated greatly in value since it was purchased) equally to my wife and her brother. We wanted to live in the house, and the brother wanted the cash value of his share. We sold the house we were currrently living in (as he wouldn’t consider a property swap), and bought his share of the MoL’s house. This whole process took over a year, with the going back and forths, as well as getting our former house ready to sell.

    Would we, under the Labour policy, had to have paid CGT on our house sale? on the buyout sale? on Both?

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  10. Lindsay Addie (1,594 comments) says:

    Another example of DC and Labour’s biggest problem which is thinking complex policy issues through. I’m not dead against CGT but I don’t want Cunliffe and Parker implementing it.

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  11. ross001 (221 comments) says:

    Hidden due to low comment rating. Click here to see.

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  12. Judith (8,534 comments) says:

    Right, so the Capital Gains Tax only if the inheritor keeps the property as an investment.

    I have to pay tax on my investments, so why shouldn’t everyone else?
    Those wanting to avoid this tax are, in my opinion, no better than those people that do cash jobs.

    You make an income – be it from digging drains, or investments, you pay tax. If you don’t want to do that, I believe there are still a few countries where you can escape that aspect of living. This is not one of them.

    I’ve always paid my legal share, and I get really peeved off with people that try to find every excuse in the book, for why they shouldn’t.

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  13. ross001 (221 comments) says:

    Would we, under the Labour policy, had to have paid CGT on our house sale? on the buyout sale? on Both?

    Why would you pay CGT on either? Are your earning or did you earn taxable income from either property? Apparently not. Therefore you wouldn’t pay CGT.

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  14. m@tt (631 comments) says:

    David, you’ve got this wrong. Do the honorable thing and update your post.

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  15. Lindsay Addie (1,594 comments) says:

    Judith said:
    “I’ve always paid my legal share, and I get really peeved off with people that try to find every excuse in the book, for why they shouldn’t.”

    I agree 100%

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  16. Psycho Milt (2,419 comments) says:

    Labour will tax the family home – when you die!

    I’m pretty sure that after I’m dead I’m not going to give a shit about taxes – or anything else, for that matter.

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  17. ArranH (17 comments) says:

    While those complaining about DPF are actually correct, reality weighs heavily on DPF’s side.

    The policy does allow the right for the inheritor to sell the property without paying CGT. However, according to Cunliffe (who may or may not know the policy) they must sell it within 30 days of the owners death. For those who have had a loved one die, or even who have sold a house, getting through the process within 30 days will be difficult.

    So, essentially, if you had no feelings for the dearly departed and you price the house cheaply then it is possible to sell without paying any CGT. However, for most people, selling within 30 days is unlikely.

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  18. redqueen (583 comments) says:

    @J Bloggs

    I have no idea, as they haven’t actually indicated any legislation, merely a few bullet points or, as Key would say, a ‘wish list’ (which is insufficient for such a complex proposition). But yes, I’m sure they’d happily subject your situation to their ‘expert panel’ and probably have a few inspectors ‘handy’ around the country to come and make a preliminary decision (and a mere few thousand dollars in cost, I should imagine). I am being, of course flippant (I hope!), but I think it reinforces the point of my second post (a CGT will be complex and unpleasant).

    However, of note, if the property was owned outright, you could have potentially borrowed the money to make the payment to your brother-in-law and retained the property for rental. This proposal makes leverage even more attractive, as it will be a far simpler way of achieving a resolution.

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  19. Judith (8,534 comments) says:

    @ Harriet (4,627 comments) says:
    September 4th, 2014 at 7:27 am

    You are wrong. The grandchildren, or whoever inherits does not get taxed if they sell the house, or if they live in the house immediately after death. However, if they use it for investment they pay tax.

    What they have inherited doesn’t decrease at all. They pay tax on their capital gain AFTER the point of inheritance.

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  20. Elaycee (4,410 comments) says:

    IGM: Newstalkzb should be dumped . . .

    Not so sure about that….

    I happened to be in the car last night when Larry Williams was discussing CGT with Cunliffe and because DC was obfuscating, Williams climbed into him.

    The CGT is definitely a death duty in disguise… a particularly bad part was Cunliffe’s suggestion the kids would have to sell the family home within a month of the parents dying, otherwise any capital gain will be subject to their CGT. A month! So the kids have to get over the loss of their parent(s) / have to clear the home of possessions / list the home / and get an agent to sell it – all within a month.

    So no surprise Williams ripped into Cunliffe and all DC could do is try to shift blame to the PM for asking a question about CGT during the CHC town hall meeting. Go figure!

    Also, Cunliffe’s faux deep voice had gone AWOL…. :D

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  21. EAD (1,327 comments) says:

    Do you notice that every single solution and “plan” the National/Labour party ever has always involves either borrowing more or taxing more to fund their elaborate social schemes.

    For example, today we have National Education Minister Hekia Parata caught lying and boasting that the Nats have increased the number of teachers by 15%! Whilst she has been caught lying is another issue altogether, the real issue is Politicians only ever judge success by how much money they spend. I.e. National is “investing” more money in roading/hospitals/schools/Treaty of Waitangi claims. It’s as if hosing more money away is the only measure of success in these Politicians world.

    Imagine instead if the National/Labour party came out and proposed – we planned to save the hard-pressed taxpayers from more inflation and taxes this year by spending less.

    What that? A pig just flew past my window.

    http://www.stuff.co.nz/national/politics/policies/10457384/Paratas-higher-teacher-figures-don-t-add-up

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  22. Nostalgia-NZ (5,281 comments) says:

    What about trust administered properties, or long term gifting? I think trusts would escape the net but still get caught in the CGT if eventually sold?

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  23. prosper (172 comments) says:

    Judith CGT may well apply to your investments thereby reducing your income. Have you checked?

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  24. Pete George (23,686 comments) says:

    There has been and still is alarming ignorance shown by Labour about their CGT policy.

    The flummoxing of Cunliffe just highlighted this ignorance. Housing spokesperson Phil Twyford admits he was briefed on it before an interview yesterday, he stated Key was wrong but Labour did not have the details available until after this embarrassment.

    Labour’s policy still states that “we will learn from the work other countries have done” – they should have learnt more before releasing their CGT policy three years ago and should have learnt more since then.

    But no – “Labour will also get advice from our Expert Panel to ensure the system is easy to understand and to administer.”

    What if the (still future) Expert Panel advises them their system will be complex and difficult to understand and administer?

    Their now published policy states “Trust law is complex though, so how we manage this will be decided once we get advice from our Expert Panel.”

    But they slammed Key for getting it “wrong” – despite Labour’s ongoing ignorance.

    Labour’s alarming ignorance about their CGT

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  25. J Bloggs (250 comments) says:

    Ross001: Thank you. I’m trying to get a clear idea around how this policy would have worked using my own circumstances.

    So, if we had put in tenants into one, or both houses for six months while we were negotiating the deal with the other family member, then we would be liable for the CGT on the house that had been tenanted?

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  26. oldpark (382 comments) says:

    Yes I heard the Labour Party Cheater David Parker.The so called Labour Party finance mouthpiece.Parker was caught in 2006 cheating by filing false declarations on his company returns.At that time he was Labour Government ATTORNEY GENERAL.Parker was running off at the mouth peddling Labour/Greens convoluted Capital Gains Tax.Cunliffe the architect of the CGT three years in the making .John Key asked him a simple question regarding family homes in trusts.Cunliffe went quiet as a churchmouse,couldn’t give an answer ,he didn’t know.Now the rubber has hit the road,when typical people like Russel Norman, Meteria Turei, Cunliffe and Parker,the company records crook,try to sneak in a defacto death duty tax by way of disguising it as no CGT on family home.Also endeavouring to not tell potential voters that a property, inherited after mum or dad pass on.When the inheritors on sell it, Capital Gains Tax will need to be paid.How can anyone have any trust in Labour or Green Party, a bunch of self seeking potential tax bullies, as well as NZ economy destroyers ,when just for starters, they attempt to ambush voters with a punitive Capital Gains Tax.

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  27. tom hunter (5,091 comments) says:

    I always love broad-brush political party explanations compared to the final detailed IRD rules:

    …. no tax if it was sold immediately on inheritance – because the tax would apply only to the period when a property was an investment property.”

    Define “immediately”. Define “investment property”. As an example, houses usually fall into a bit of disrepair as the owners age, especially when they get into their 80’s, so time and money has to be spent to get the place shipshape before sale.

    But Labour’s capital gains tax policy since 2011 has stated the family home would be exempt, and in a question and answer said: “If my family home is in a trust will it be taxed? No. The fundamental principle is that the family home will not incur a CGT.”

    Then why could not Cunliffe state this straight up in the debate? It’s a simple Yes/No answer. The fact that he stalled on it indicates that he had a brain-freeze – or that once again the detail contains weasel words, which is why Key’s debate prep focused in on it.

    Also, both of these quotes are not Labour speaking but a reporter, one Vernon Small, and since reporters aren’t the brightest tools in the shed I don’t think I’ll take his word for it, thanks.

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  28. Judith (8,534 comments) says:

    @ J Bloggs (176 comments) says:
    September 4th, 2014 at 7:28 am

    I am not 100% sure, but this is my opinion.

    The house was left to your wife and her brother. Each owning 50%. At the point of inheritance, the house had a certain value, lets say $500,000. The brother wants an immediate sale – he wants his $250,000 (the value of his inheritance). If your wife gives him that amount, then he has made no ‘gain’ on the capital value. Your wife, pays that amount, giving her full value of the property, which is still the original $500,000. There is no ‘gain’. As you now live in the house it is the family home. As you had to sell your original family home to purchase it, there is no CGT to pay because it is the ‘family home’.

    The basic premise being that there was no capital gain. Therefore I do not believe there would be tax to pay in that situation IMO.

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  29. Harriet (5,132 comments) says:

    “…or even who have sold a house, getting through the process within 30 days will be difficult……”

    Not anymore. They’ll be immediatly sold – to themselves or related parties to avoid paying capital gains tax. At reduced charges by realestate agents if they also get the later sale.

    After all – how is Cunners going to sell the idea that some people may have to sell into a falling market to avoid paying capital gains tax? :cool:

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  30. Judith (8,534 comments) says:

    @ tom hunter (4,577 comments) says:
    September 4th, 2014 at 7:45 am

    Yeah, having a brain freeze is not a good look for a leader. A bit like Key fudging the figures – not a good look either ;-)

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  31. SGA (1,143 comments) says:

    I’m sorry – reading the various comments above has left me genuinely confused about what the policy is. Is it that –
    Any capital gain that the property has made during the life of the owner is not subject to a CGT, but any further capital gain starting 30 days after the death of the owner is subject to CGT.
    Thanks in advance.

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  32. bc (1,377 comments) says:

    Elaycee, leave igm alone. He’s not happy (come to think of it, is he ever happy?) until he gets his daily NewstalkZB rant out of his system.
    Think of it as like a public health service.

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  33. redqueen (583 comments) says:

    @ Judith

    That supposes that the individual, rather than the property in question, is subject to the ‘gain’. No CGT that I am aware of ever contemplates that, instead it being linked to the value (and gain) on the property in question. So a house which was owned by someone now deceased would be subject to the gain.

    The UK has something similar around the primary residence concept, whereby you have to show how long it was your primary residence (and it can be split over multiple properties, with corresponding spreading of the relief). This could be used in NZ, but again, you’re now getting into a nice and dark area of capital taxation and one which will be fraught with difficulties and the need for a rather lot of compliance.

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  34. ross001 (221 comments) says:

    Mary Holm has a detailed article about a CGT. I guess not many people read the Herald any more. :)

    http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11309629

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  35. Pete George (23,686 comments) says:

    “Then why could not Cunliffe state this straight up in the debate? It’s a simple Yes/No answer. The fact that he stalled on it indicates that he had a brain-freeze – or that once again the detail contains weasel words, which is why Key’s debate prep focused in on it.”

    This was Phil Twyford’s take on it.

    Why couldn’t your leader answer ‘no’ last night like you just have when I asked you about Capital Gains Tax, why wasn’t he as knowledgable about that and as definite as you’ve been?

    Twyford: Well, it won’t surprise you that I got briefed on that very issue before I came in to see you this morning. You know there’s a lot of policy detail here. The fact is that in that debate John Key was wrong. Our policy is clear, it’s in the manifesto.

    It’s excluding the family home.

    Twyford: Absolutely. John Key was wrong. Yeah I’m sure David wishes he’d answered ah more quickly but these things happen in politics.

    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11318517

    It surprises me that as housing spokesperson Twyford would have needed briefing on a key part of Labour’s housing related tax policy.

    Things like this shouldn’t happen in politics, especially during an election campaign.

    It was notable that Twyford didn’t defend Cunliffe’s freeze, just accepted he had stuffed up.

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  36. Judith (8,534 comments) says:

    @ Harriet (4,628 comments) says:
    September 4th, 2014 at 7:50 am

    You don’t seem to get it. If the value of the property they inherit is $200,000 and they keep it for two years, renting it out, then sell it for $300,000, they have made a profit.

    If I inherited $200,000 in cash and invest it in shares, and make a 50% profit, I have to pay friggen tax on that profit, so why shouldn’t everyone else?

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  37. J Bloggs (250 comments) says:

    Judith: Thank you.

    so if we lived in the rapidly appreciating Auckland property market, and the house was worth $500K at the time of death (from a valuation acquired at the beginning of negiotiations) and after a year of to-ing and fro-ing, the a new valuation is sought (because the market has been changing), and the house is now worth $600K, then we would be liable for CGT on the $100K?

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  38. mandk (1,018 comments) says:

    A bit of career advice for any youngsters out there:

    If Labour get into power, train as a tax lawyer – you’ll make an absolute fortune devising CGT tax dodges.

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  39. tom hunter (5,091 comments) says:

    Is Mary Holm a tax lawyer/accountant?

    There’s also this Kiwiblog thread from yesterday:

    A parliamentary staffer notes to me:

    Not sure how Cunliffe’s attempt to clarify Labour’s CGT squares with the summary below in their policy document, which doesn’t specifically exclude family homes owned by trusts, and in fact says trusts could not be used to avoid the CGT.

    Excluding trust-owned houses from a CGT would seem to raise questions about whether different trustees of the same trust, who live in different houses, would be exempt from a CGT on a number of properties, which would become complicated and costly in terms of foregone revenue.

    As DPF said at the time:

    I expect the IRD will need to hire hundreds of new staff to deal with such a complex CGT.

    I expect so too!

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  40. Grendel (1,005 comments) says:

    If the property is in a trust, it is not the “Family Home”, thats a nice title, but has nothing to do with reality.

    When i sold my house to my trust, it was clear that as trustee i was managing the property for the beneficiaries. as a beneficiary, i was gracefully allowed by the trustees to live there, but i do not own it. i may consider it my home, but its not, its the trusts property.

    So unless they are going to issue a specific point of law stating that the house in a trust, but also live in, now counts as a new legal entity called “family home” and exempt from CGT, its going to be taxed. Do you have to be a trustee? how many trustees can you have, what if you are not the trustee becuase you are not compos mentis so are no longer a trustee? etc etc etc.

    Labour are not lying (exactly), when they say the family home in a trust will be exempt. they just forgot to mention that there is no legal definition of “family home”, so no ones house will count. if obfuscation, but not surprising when it comes from labour and the other high spenders trying to justify a new tax.

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  41. prosper (172 comments) says:

    Judith however the legal and accounting fees required to have the experts prove to the IRD that it is not subject to cgt are substantial as are the costs to yourself. Another option is to sell the house and charge the purchaser the cgt. This happens in Australia.

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  42. redqueen (583 comments) says:

    @ J Bloggs

    As I’ve said, that doesn’t apply in any CGT I’ve ever seen. The question is the original value of the house (or the value at the valuation date, as Labour is proposing the tax will be based on a starting valuation date, rather than the original purchase price).

    So using a future example, if the tax is introduced (for valuation date purposes) on 1 April 2015 (just an example) and in the future someone dies under similar circumstances to yours on 30 June 2017, but the house is only disposed of on 30 June 2018, the question would be whether there is any form of primary residence exemption applicable between the 2015 and 2017 dates, with the 2017 and 2018 dates very likely being taxable (and potentially both, depending on how the legislation is written).

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  43. Judith (8,534 comments) says:

    @ redqueen (526 comments) says:
    September 4th, 2014 at 7:55 am

    Yes, that is right, it is the property – but there was no gain for the property in that situation – presuming the siblings decided on a 50/50 share of the value of the property.

    It’s easy enough solve with a simple ‘stay of execution clause’ where a pending splitting of an inherited property is registered to allow time for arrangement (sale of another house etc) to take place. If however, there is an increase in the meantime, then as an ‘income’ or profit, tax should be paid. The receiver gets ‘more’ than what they inherited.

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  44. Harriet (5,132 comments) says:

    Judith#

    As I understand it, it is the ‘family home’ which for most people is the only major asset that they have – to be divided up between the children. The state should not tax that.

    Those who pass on cash, or any other form of wealth as an inheritance, have in most circumstances probably borrowed AGAINST the family home. That type of inheritance may then be taxed by the state.[but I disagree – that’s another matter.]

    I also believe the ‘family home’ is your last private home. Which is another matter of concern – as some may sell down before they die.

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  45. itstricky (1,900 comments) says:

    DPF – it’s almost as if JK rang you (sorry correction correction) The PM’s office called you after the last leader’s debate and said ‘quick Davo, we’ve got em on this CGT thing’. I’d appreciate you posting some facts on what Parker et all have said, and the content of Labour’s policy document rather than speculative finger pointing.

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  46. OneTrack (3,229 comments) says:

    SGA – No that is not correct. You will pay tax on the capital gain since the valuation day.

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  47. itstricky (1,900 comments) says:

    Quick show of hands then – how many commentors on this thread have investment property? Up tick is yes.

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  48. SGA (1,143 comments) says:

    September 4th, 2014 at 7:00 am by David Farrar

    UPDATE: You can avoid the death duty if you decide to sell the home with 30 days of your parents dying. Charming. At a time you are mourning, you will be forced into rushing the home onto the market.

    Ok, now I’m more confused. From this I infer that unless you sell the home within 30 days of the owner’s death you must pay tax on the capital gain throughout the late owner’s time in the home.
    Is this right?

    Add –
    OneTrack at 8:13 am

    SGA – No that is not correct. You will pay tax on the capital gain since the valuation day.

    Thank you – and the valuation day is?

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  49. redqueen (583 comments) says:

    @ Judith

    No, the question is what was the value of the property at the point of purchase or the official valuation date (whichever is the latter). We would then need to know how / what form of primary residence exemption would apply. At that point, we could then make a proper determination.

    However, as I’ve said, we’ll need to see the legislation for this, the regulations, IRD’s interpretations, etc. All of which isn’t contained in Labour’s wishlist :) But they’ll set up an ‘expert panel’ to work out all of these piddling details. So vote for us, we’ve got a plan, which is to set up a committee to look into actually implementing our rough idea, which we can’t actually do in advance of declaring our proposal. What a great way to handle policy.

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  50. Judith (8,534 comments) says:

    @ tom hunter (4,578 comments) says:
    September 4th, 2014 at 7:58 am

    Good, more jobs, which will be paid for out of the increase in taxation.

    Is having more jobs a bad thing? Please let us know, because several parties are campaigning as if its a good thing.

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  51. Harriet (5,132 comments) says:

    Judith#

    “….I also believe the ‘family home’ is your last private home. Which is another matter of concern – as some may sell down before they die….”

    That ment to read:

    “I also believe the ‘family home’ is your last private home. Which is another matter of concern – as some may place vast wealth INTO homes. Key and Cunliffe for example.”

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  52. Nigel Kearney (1,049 comments) says:

    I think they mean that liability for capital gains will not accrue at all during the period that the property is occupied by its owner.

    So if your parents bought a house in 1970 for $10k and it is worth $500k when they die, none of that $490k increase is liable for CGT, ever, regardless of what happens later. If you don’t sell within 30 days you would only be liable for tax on any gain above the $500k. And presumably the 30 days would not start until the assets of the estate are distributed, which is months after the death in most cases.

    Of course, it would be easier to understand if Labour just said that.

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  53. tom hunter (5,091 comments) says:

    Quick show of hands then – how many commentors on this thread have investment property? Up tick is yes.

    Not me – but only because I returned from the USA with enough cash to invest in a business. Most others I know here in NZ, the answer would be yes – including more than a few Labour and Green leaning sorts that I’ve been having fun with in recent days. They’re all “Urban Liberals”, to use the US term, they really don’t like National – and judging from the worried looks on their faces when the CGT and the Green’s 40% income tax they’re no longer certain votes for either of those parties.

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  54. freedom101 (510 comments) says:

    For accountants and lawyers a CGT will be like winning Lotto. The admin costs will be horrendous. A completely dead weight cost.

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  55. itstricky (1,900 comments) says:

    Ok, now I’m more confused. From this I infer that unless you sell the home within 30 days of the owner’s death you must pay tax on the capital gain throughout the late owner’s time in the home.

    One would doubt it, presuminwe are talking just about the deceased’s “family home” and not any investment properties they may have owned. But let’s get DPF to tell us.

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  56. OneTrack (3,229 comments) says:

    Itstricky – we don’t know what the policy will actually be because labour can’t seen to get their story straight and they have not considered all the scenarios that people are now asking about. That’s for the ‘expert’ panel (parker?) to decide.

    And it will depend on what Russell says.

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  57. Judith (8,534 comments) says:

    @ redqueen (528 comments) says:
    September 4th, 2014 at 8:13 am

    I agree, but I would point out, that many the policies on offer, regardless of party, follow those same processes. None of them have the actual working document outlining the full and precise details of such legislation. I’m not really sure why the ‘dig’ at Labour, when what you claim is pertinent to every policy requiring a change of legislation.

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  58. IGM (527 comments) says:

    Judith: We don’t want any more leeching public servants lining up at the troughs . . . there are still 50,000 too many of these bludgers.

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  59. waikatogirl (653 comments) says:

    So how come Cunliffe spent yesterday saying “John Key is wrong” when John only asked him a valid policy question? Cunliffe trying to turn his gaffe of not knowing his own policy. Cunliffe keeps trying to answer any difficult questions by changing the subject but John didn’t let him that time

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  60. redqueen (583 comments) says:

    @Freedom101

    Bingo. I might end up going back to working in taxation, instead of working in ICT. At the moment, I add value to my organisation and there are actual outputs (what a thought!). If I’m back to working in taxation, I will simply be employed to comply with requirements imposed by the government. But hey, someone else will need to be found to do my current job, and that will increase employment…

    The fact that we’ll actually be worse off for it doesn’t matter to the socialists.

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  61. itstricky (1,900 comments) says:

    Onetrack

    Itstricky – we don’t know what the policy will actually be because labour can’t seen to get their story straight

    Interesting that DPF is giving us all the definitive “facts” then, isn’t it.

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  62. itstricky (1,900 comments) says:

    Another quick show of hands – who agrees with Judith’s assertion that profit on property investment should be taxed like any other? Up tick is yes

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  63. Judith (8,534 comments) says:

    @ itstricky (1,709 comments) says:
    September 4th, 2014 at 8:18 am

    The family home, lets say has a capital value of $500,000 the day Grandma curls up her toes, does not incur CGT at that time. If it is sold within the prescribed time period, no tax is payable. If it is sold for $500,000 six months later, no CGT is paid, because there was no ‘gain’. If it was sold six months later for $550,000 then yes, CGT would be payable on the $50,000 gain in Capital Value if the property had been retained for investment purposes. The value is measured at the time the home changes ownership, not whilst Grandma was alive. A gain is a gain is a gain, and if you make a profit on any investment, other than your family home, you pay tax – just as you bloody well should do IMO.

    An investment is an investment – the profits of which are an income – whether it be a property or share portfolio – there is no difference – if you make a profit you pay tax.

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  64. dog_eat_dog (790 comments) says:

    Why is Cunliffe’s spokespeople saying one thing and he saying another on such a key policy?

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  65. SGA (1,143 comments) says:

    Nigel Kearney at 8:16 am

    I think they mean that liability for capital gains will not accrue at all during the period that the property is occupied by its owner.

    Then it’s a bit over-egged to call it a death duty?

    Curiosity question – Great Uncle Sid bought a Tony Fomison painting years ago for $5,000, and when I inherit sometime in the near future, it’s worth an estimated $100,000. I hang on to it, and a few years down the track I sell it for $200,000 (because there’s been a big international interest in Fomison’s work, say). Under Labour’s CGT ideas, what would I be taxed on?

    (and, no, I’m not in this position :-) )

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  66. Judith (8,534 comments) says:

    @ waikatogirl (45 comments) says:
    September 4th, 2014 at 8:21 am

    Sorry, but he asked the question, and then he made a definitive statement that if you voted for Labour you would pay CGT on a family home if it was in a trust.

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  67. simpleton1 (232 comments) says:

    Judith (8,474 comments) says:
    September 4th, 2014 at 8:14 am
    @ tom hunter (4,578 comments) says:
    September 4th, 2014 at 7:58 am

    Good, more jobs, which will be paid for out of the increase in taxation.

    Is having more jobs a bad thing? Please let us know, because several parties are campaigning as if its a good thing.

    Never mind too much, as we will have full employment as the civil service bureaucracy employment numbers will increase, IRD, valuation department, inspectors, judges etc.
    Not only paid for by taxation but by the tax payer but the asset holders I guess will have to fork out enough money to keep the private business bureaucracy going too, sure will be an increase of accountants, valuers, lawyers .

    Great to increase the well paid “high value” jobs in little old NZ, perhaps a case for more high value immigrants too.

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  68. waikatogirl (653 comments) says:

    Judith
    So the leader of the opposition knew laboors policy better than their own leader! Wow, thanks for the obvious clarification?

    Paying for more jobs out of the tax received – so more govt employees then, just what we need!!

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  69. Judith (8,534 comments) says:

    @ waikatogirl (46 comments) says:
    September 4th, 2014 at 8:33 am

    that is where you are wrong – John Key either didn’t know the policy, which is why he got it wrong, or he lied. You seem to have not understood the fact that what Key said was WRONG.

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  70. itstricky (1,900 comments) says:

    The family home, lets say has a capital value of $500,000 the day Grandma curls up her toes, does not incur CGT at that time.

    Thanks Judith. I think I already understand that all. I am interested in hearing DPF telling us the facts seeing as he has started this thread screaming blue murder. In much the same way JK trumped DC with “facts” that appeared to be incorrect according to Labour’s policy document but made for a good sound-bite. I call it the elections coefficient. The closer you get, the bigger the lies get – just to make that king hit at the right time.

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  71. tom hunter (5,091 comments) says:

    When GST was being promoted the same arguments were made: that it would broaden the tax base and thus income taxes could be reduced. And to be fair that’s what happened: a 10% GST along with the top tax rate reduced to 33%.

    In 2014 GST is 15% and the top tax rate is 33%, BUT …. Labour-Greens have made it quite clear that the top tax rate will be increased when they get into power.

    The same thing will happen with CGT. It’s 15% now but come 2025 it would not surprise me to see the following:
    GST – 20%
    CGT – 20% (and made broader and deeper via “minor” changes to regulations that require no electioneering vote fight)
    Top Income Tax rate – 40%

    Which is to say that all these arguments about how CGT will divert investment from property into businesses, reduce dependence on income tax, broaden the tax base and so forth – is all just a cover for the real reason, which I put forward in 2011:

    The takeaway message is not the back-and-forth arguments over details but the primary reason that a CGT is finally being proposed: the state is running out of money.

    Once you understand that, then a CGT makes perfect sense – as will every other new tax that will have to be created in the next few years.

    It seems quite a gamble to think that the state can somehow – across the decades and many economic cycles – consistently push revenue growth ahead of government expenditure growth.

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  72. Ed Snack (1,927 comments) says:

    Judith, I’d get a tax lawyer or accountant to assist you with your family wealth (which you’ve mentioned in the past) as you seem misinformed. If you invest $200K in shares and they happen to go up in value, you are liable for income tax on the gain if you invested for the purpose of obtaining that “capital” gain; and equally you can claim a loss if the shares lose value. If you invest for the dividend income and as a long term investment, the change in value of the underlying shares is neither taxable nor deductible as a loss.

    And extra jobs funded from taxation are a loss, you should know that. Otherwise the solution to our unemployment issues would be a 100% tax rate and jobs for all, paid out of the tax. You can produce the illusion of low unemployment but that will come at the cost of severely restricting economic growth and handicapping all by reducing available wealth. Just think if (and it’s a huge if, the actual tax taken by a CGT is likely to be but a small fraction of that claimed because people WILL alter their behaviour) the $4B claimed as a tax take has to come from somewhere, that $4B is taken out of the private economy, subject to the inefficiency overhead of all taxes and recirculated back as, say, $3B. The balance goes to pay public employees for doing nothing productive at all but policing and gathering the tax. That’s a huge loss to the economy.

    And what’s the moral basis for this CGT, I assert it is simple greed + envy plus an ardent desire to ensure that people can’t become independently wealthy enough not to need government assistance. The rise of a class of people who might not be utterly dependent on the state and hence in the power of politicians is seen as a significant threat to politicians of all stripes, but especially those of the so called left who’s egos demand that we acknowledge their innate superiority in deciding how we should (be allowed) to live our lives.

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  73. redqueen (583 comments) says:

    @Judith

    I’ll have a ‘dig’ at Labour because they’re proposing a massive shift in taxation (both policy and quantum) with nothing more than a wishlist and leaving out any of the ‘hard’ things. Equally, they’ve got a policy which is effectively counter-productive to their supposed aims (which is a recurring theme). Saying you’ll set up an inquiry is fine, but saying that you’ll introduce ‘$4bn – $5bn’ of additional taxes, with no real detail, is daft.

    ‘All parties do it’ isn’t an excuse, and it’s also the sheer scale of what they’re proposing. As a counter example, ACT is proposing to cut the company tax rate to 12.5pc, which is a massive shift and requires significant pairing back of expenditure, but in the end, it’s a simple shift in the rate of tax, not a fundamental change in the nature of our tax system. The ACT proposal isn’t counter-productive to what they’re advocating (generating more jobs and investment). And I am not advocating (pro or con) for what ACT is proposing, merely explaining the difference in policy approach.

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  74. tom hunter (5,091 comments) says:

    …. “facts” that appeared to be incorrect according to Labour’s policy document….

    (Chuckle), I like your style.

    Judith, I’d get a tax lawyer or accountant to assist you with your family wealth (which you’ve mentioned in the past) as you seem misinformed.

    Trust fund babies usually are: The money comes from where, Granma..?

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  75. wreck1080 (3,969 comments) says:

    Labour should have done a lot more planning on the details but this is typical of lefties to shoot first before thinking .

    To introduce a CGT requires years of planning on details like this. These questions cannot be answered on the fly as labour are doing.

    Gimme a land tax, and reduce my income tax accordingly.

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  76. waikatogirl (653 comments) says:

    John wrong, well that could be debated but Cunner’s definitely didn’t know his policy as well as he should have. Cunner’s is a shifty bugger trying to blame others for his short-coming. We all know people who can’t take responsibility for their actions but I don’t want to be led by him.

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  77. redqueen (583 comments) says:

    @ wreck1080

    Here, here.

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  78. Judith (8,534 comments) says:

    @ J Bloggs (178 comments) says:
    September 4th, 2014 at 7:57 am

    Yes, you would have to pay CGT on the $100,000 profit of that property if it was not your family home.

    The amount you inherit is at the time of death (or when the inheritance is sorted legally). Therefore you inherited $500,000. If whatever you do with that increases in value from that point on – you pay tax on the increase.

    If you took that $500,000 in cash, and invested it in shares, and made a $100,000 profit – would you expect to have to pay tax on that profit? If you used that money and bought goods which you then sold for $600,000, would you expect to have to pay tax on that profit? Do you expect a business owner, who uses his $500,000 (which he might have inherited), to purchase stock and sell it for a profit, not to pay tax?

    Many of us have benefitted from money/property that has been left to us by family members or such – tax should not be paid on that inheritance, HOWEVER, if we then use that inheritance to make a profit – then like any other profit making activity, tax should be paid on our subsequent gains.

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  79. tom hunter (5,091 comments) says:

    If you invest for the dividend income and as a long term investment, the change in value of the underlying shares is neither taxable nor deductible as a loss.

    Exactly, but that puts the kibosh on the dream that this will see NZ begin to develop new businesses with all this diverted money: NZ’s very own version of Silicon Valley (in GMO – ha, ha, ha).

    Businesses like that are well known for not producing a dividend stream for years because they’re ploughing all their profits back into the company for R&D, expansion and so forth. You invest in them knowing that but also taking the risk that if they do succeed they IPO and finally see a return on your investment.

    It works in the USA despite them having a CGT because the latter necessarily has huge loopholes in it – otherwise that source of funding would be dead. Given how proud NZ is about it’s clean, tight tax system I’d be willing to bet we won’t see such loopholes here.

    And extra jobs funded from taxation are a loss, you should know that.

    Good reply but frankly the original comment was so dumb I did not think it worth responding to. But it’s probably a common belief with New Zealanders so worth tackling. Here’s hoping few of them vote!

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  80. Judith (8,534 comments) says:

    @ Ed Snack (1,804 comments) says:
    September 4th, 2014 at 8:39 am

    Our family trust has a perfectly good tax lawyer, and accountant (both of which are family members). I didn’t go into the small details because they are irrelevant to my basic premise, which is, if you make a profit, you pay tax, regardless of how that profit is made, excluding of course the family/private home.

    There are far to many people evading their taxation responsibilities, simply because they manipulate the existing tax regulations. One of the biggest rorts has become property investment. This tax will make those investors have to meet their obligations. The tax does not take away from what you already have, it simply takes a percentage of any profit that you gain.

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  81. oldpark (382 comments) says:

    After John Key handed David Cunliffe his arse ,when he couldn’t answer a simple question on family home in trust.CGT would be payable on a house in a trust under Labour’s potential punitive tax.Cunliffe and Parker tried to bluff their way out of it by saying our man for all reasons and seasons John Key was wrong said Parker ,who lied on his company records in 2006.Cunliffe came aboard with Parkers present lies.Well surprise,surprise,Labour changed their PDF document at 11.30 AM yesterday morning go figure that one.If John Key was wrong on what he said on Tuesdays debate,why did Parker and Cunliffe doctor the PDF document,and Cunliffe comes out all guns blazing.confirming he is just another common liar.

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  82. Mark (1,493 comments) says:

    David, nothing defacto about this it is the reintroduction of inheritance tax but only on one asset class. Begs the question as to why does this inheritance tax not apply to shares, cash and other asset classes?

    What it seems to me is that Cunliffe has been well caught out by Key on this and is making up policy on the run. Cunliffe’s ill discipline is turning into a nightmare for labour.

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  83. Mark (1,493 comments) says:

    @Judith 8.39 “There are far to many people evading their taxation responsibilities”

    Judith are rates not a taxation responsibility?

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  84. ArranH (17 comments) says:

    As we can see from this thread, the CGT policy from Labour is far from clear. Cunliffe almost admitted that by not being able to answer a simple question on it during the debate.

    During Cunliffe’s interview with Williams last night, he noted that the policy was clear and had been on the Labour website for some time. He then stated, almost in the following sentence, that Labour had just updated that policy. I wonder if it was updated because the Prime Minister pointed at that, as it was, it did not exclude family homes held in trust.

    I haven’t read the policy, either before or after Labour updated it yesterday, so I can’t confirm either way. But it is definitely a confusing and unclear policy, even for Cunliffe.

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  85. tom hunter (5,091 comments) says:

    Tax evasion is a crime. Tax avoidance is not.

    Our family trust has a perfectly good tax lawyer, and accountant (both of which are family members). I didn’t go into the small details ….

    MUHAHAHHAHAHHA.

    Combine this with Ed Snack’s point about being “misinformed” and I see the following future for this particular mark:
    Granma, what happened to my trust money?

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  86. themanwhowatches (40 comments) says:

    Any property you purchase with the intention of later selling it for profit is already subject to tax at your applicable marginal rate on the difference between purchase and sale prices subject to certain deductions. This is no different than anybody who makes a profit from shares and other investment vehicles (except their allowable deductions are more limited). People suggesting otherwise (as Judith appears to be doing) are wrong.

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  87. Odakyu-sen (752 comments) says:

    All these taxes.

    How on earth will families accumulate wealth so that they can look after the health, educational and welfare needs of their members….?

    (What’s that you say? What do you mean: “this is discouraged under socialism”….? Do they want us to be more dependent on the state and less self-reliant?)

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  88. J Bloggs (250 comments) says:

    Judith: Thank you for your responses.

    Another clarification question using our scenario:

    Upon the settlement of the MiL’s estate, the house was 50/50 owned by my wife and her brother. It was valued at the time of the estate settlement at $500K. A year goes by while various issues are sorted through and the value increases to $600K. My wife buys out her brother’s share for $300K (50% of the value at time of sale). She sells her current family home purchased for $250K on the day the CGT rules came into play, for $400K in order to buy out her brother.

    Now, my understanding of how the CGT rules apply would mean:

    a) The brother is liable for CGT on $50K (his share of the increase in value on the MiL’s house)
    b) My wife is not liable for CGT on the 150K of gain on her previous home, as that was the family home up until the point of sale
    c) My wife is not liable for CGT on $50K (as her share of the MiL’s house gain has now been subsumed into the new family home)

    Is this correct?

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  89. kowtow (8,776 comments) says:

    freedom 101 and others have said Cunners and Labour is “policy on the hoof”. And yes we already have CGT. Here’s the experts take on it.Sadly this was on the back page of the ODT when it should be a front page screaming headline.It’s probably one of the only truly defining differences between Labour and National in this election.

    http://www.odt.co.nz/news/business/314725/capital-gains-policy-stumbles

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  90. Fisiani (1,047 comments) says:

    Labour say that everyone will get a baby bonus – but then read the fine print – NOT TRUE
    Labour say no CGT on the family home – but then read the fine print -NOT TRUE
    Labour say they will reduce class sizes -but then read the fine print – NOT TRUE
    Labour say they will run a surplus -but then read the fire print -NOT TRUE
    Labour try to trick you, Labour try to fool you. Labour try to con you. Labour try to get your vote.

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  91. burt (8,316 comments) says:

    Fisiani

    Labour say socialism works – look at every Labour government for the last 50 years – NOT TRUE

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  92. Chuck Bird (4,924 comments) says:

    “Begs the question as to why does this inheritance tax not apply to shares, cash and other asset classes? ”

    I would think it would apply to shares. It would be major job working it out though. On a lot shares it would not be too difficult where there were no 1 for 5 offers or buy backs or special dividends or bonus.

    How would it work if the shares made a loss?

    I think Labour could attract votes from accounts and property valuers.

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  93. burt (8,316 comments) says:

    J Bloggs

    That sounds about right. The Brother would have had hard cold cash that he might have used for political advocacy against Labour so it must be taken off him. Your wife reinvested in property and that’s an acceptable practice according to labour.

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  94. dime (10,120 comments) says:

    Im sure the waitakere man cant wait to pay tax on his inheritance.

    Great policy labour.

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  95. jcuk (714 comments) says:

    Ed Snack 8.39 The point is that somehow we have to work out what we do with all the people the counry dose not need to operate … SO EITHER we pay them the dole or we find jobs for them …. the ‘loss’ comes from having too many people in the country than required to run it. Irresponsible copulation is the basic problem.

    That of course is getting back to a basic point which is nothing to do with this thread.

    I agree with Judith that all income/profit should be taxed … even if in practice it boosts the ‘black ecconomy’ for those who manage backhanders. Greece here we come, and probably other countries too.

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  96. SGA (1,143 comments) says:

    ArranH at 9:14 am

    As we can see from this thread, the CGT policy from Labour is far from clear.

    Perhaps, but the original post has added to that –
    “Almost all family homes will be taxed on their capital gain, when you die, if not placed on the market immediately.”
    and
    “Almost all family homes will be taxed on their capital gain from when you die, if not placed on the market immediately.”
    aren’t the same thing (to me anyway).

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  97. Sir Cullen's Sidekick (895 comments) says:

    Fear not my friends! There is a famous saying – “Nothing is certain but death and taxes” – Labour party is proving that. But I have a new saying – “Nothing is certain but the death of the Labour party with this tax”. Let us celebrate within 30 days of 20th September.

    BTW – me and my junior are going out lunch time today to two tick National. Cannot take a chance waiting until 20th September bros.

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  98. burt (8,316 comments) says:

    Psycho

    Labour will tax the family home – when you die!

    I’m pretty sure that after I’m dead I’m not going to give a shit about taxes – or anything else, for that matter.

    The caring left…. I’m OK Jack – stuff the rest of you !

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  99. burt (8,316 comments) says:

    I think I’ll go and buy a new computer over the weekend with more than the 16GB of ram in my current one. I’ll need the extra memory to render the flow chart for how this policy works.

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  100. alwyn (438 comments) says:

    The Labour Party tell me, as a full explanation that.

    “But Labour’s capital gains tax policy since 2011 has stated the family home would be exempt, and in a question and answer said: “If my family home is in a trust will it be taxed? No. The fundamental principle is that the family home will not incur a CGT.”

    I shall put any rental properties I own, (sadly none), into a trust.
    Then I shall rent them to families.
    Clearly the property is in a trust. Clearly it is my tenants family home.
    It is therefore exempt from CGT. All is well.
    No doubt some people with small minds will claim that the tenants don’t have any interest in the trust but that is exactly the same as people who put their own home into a trust and continue to live there. They don’t own the property any more do they?

    No doubt Labour will claim that isn’t what they mean, but it is what they say. Why, of course, should we believe anything that they say?

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  101. burt (8,316 comments) says:

    alwyn

    Tax accountants, property developers and lawyers are the new campaign target for the Labour party. All paid for by taxes and union fees extracted from low paid workers.

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  102. Pete George (23,686 comments) says:

    This gets even more pathetic.

    @TovaOBrien

    David Cunliffe misspoke on the death tax.A home would not have to be sold within a month of a parent dying before the cap gains tax kicks in

    Labour hasn’t decided on the grace period for selling the house after a parent dies without being taxed by the CGT. In Oz it’s 2 yrs

    They haven’t done anything over the last three years to sort out policy detail and seem to be making things up as they go..

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  103. Odakyu-sen (752 comments) says:

    Dumb question: Do you pay capital gains tax on nominal gain or real gain? (If it’s nominal gain, then that’s totally screwed up.)

    Why? Let’s, say that over time the nominal value of a house doubles, but the price of other goods and services triple. You would have “lost money” on your house in real terms, but would still be taxed on your nominal gain. How whacked is that?

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  104. stevef (4 comments) says:

    @Judith ( somewhere above)

    from Labours website; can you explain this in clear words and please use an example?

    “….Treatment of gains at death: Capital gains on inheritance passed on after death will be rolled over to the heir, and not payable until the gain on the asset is realised….”

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  105. burt (8,316 comments) says:

    Labour hasn’t decided on the grace period for selling the house after a parent dies without being taxed by the CGT. In Oz it’s 2 yrs

    Internal polling is needed to determine if we “like” or “hate” the Oz policy before we clarify the NZ policy.

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  106. Pete George (23,686 comments) says:

    Odakyu-sen – I think I recall them saying that the 15% rather than a full tax rate (33% or whatever) was being used to sort of allow for that.

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  107. Odakyu-sen (752 comments) says:

    Hello Pete,

    Why should you pay any tax when you have not made a real gain.

    (Channeling the Sesame Street tune…) “One of these gains is not like the other, one of these gains just isn’t the same…”

    (You get my point?)

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  108. PTM (47 comments) says:

    I am getting a bit confused by Judith’s examples on the dividing up of the house component of an estate. The way I read it is when and if the tax comes into being, all properties will need to have an up to date valuation ( perhaps the same valuation we need to do for insurance purposes) and if a property is purchased after that date, the purchase price becomes the base valuation.
    Any CGT applied after that for whatever reason is based on the difference in the base value and the disposal value.
    Please correct me if I have got it wrong.

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  109. Harriet (5,132 comments) says:

    CGT in Australia on shares works like this:

    If you hold the shares for MORE than 12 months you then pay income/capital gains tax on 50% of the capital gain. You pay that at your marginal income tax rate.

    On the other 50% gain you don’t pay any tax – at all!

    If you hold the shares for LESS than 12 months – you then pay tax on 100% of the shares capital gain.

    It is a mecahnism that distinguishes traders from investors for tax reasons. And allows company boards to concentrate on the bigger picture rather than having to concentrate on getting positive quarterly results to satisfy ‘the market’. Long term investors also benefit.

    It’s pretty fair all around.

    [Howard bought it in.]

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  110. Harriet (5,132 comments) says:

    Actually it was probably Pete Costello.

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  111. Adolf Fiinkensein (2,922 comments) says:

    PTM

    Insurance valuations don’t usually include land value.

    I suggest it is more likely rateable values at the time would be taken into account as it will be impossible to carry out new valuations on every property in NZ for a given date. Therein lies a whole can of worms.

    In short, the policy is a shambles which, like Gillard’s mining tax, will raise less than one percent of the revenue predicted.

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  112. chickadee (22 comments) says:

    Why do you care if you are taxed after you die? Thats just stupid.

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  113. Michael (3,811 comments) says:

    chickadee
    Spot on.
    When you are dead you are dead. You are not going to worried about what happens after you are dead.
    I see DF is saying the children will be rushed into selling the family home within 30 days if they want to avoid paying death duty. Only if they are a pack of greedy buggers, David.

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  114. Michael (3,811 comments) says:

    My children couldn’t care less who either myself of my wife left our estate to. But my understanding is if you don’t want your children to challenge your will then you have to agree to leave them something.
    Of course your estate might be worth quite a decent amount when you are in your late seventies or early eighties, but if either your wife or your husband has to go into a nursing home that will swallow up quite a bit of your estate pdq.
    Of course a lot of oldies go on overseas trips, they call it spending the inheritance. Reverse mortgages come in handy as well.
    However, my wife and I don’t much like travelling overseas at our age so the inheritance keeps on mounting up.

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  115. tom hunter (5,091 comments) says:

    Looks like Psycho Milt is in good company ….

    I’m pretty sure that after I’m dead I’m not going to give a shit about taxes – or anything else, for that matter.

    Why do you care if you are taxed after you die? Thats just stupid.

    chickadee
    Spot on.
    When you are dead you are dead. You are not going to worried about what happens after you are dead.

    I’m sure you’re children will be grateful that you were so happy to pass the money on to the state rather than to them. After all the state knows better than they do how that money should be spent, and it will probably be for their own good anyhow.

    Plus they’ll have the joy of knowing how much you believed in socialism.

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  116. Harriet (5,132 comments) says:

    “….I see DF is saying the children will be rushed into selling the family home within 30 days if they want to avoid paying death duty. Only if they are a pack of greedy buggers, David….”

    And if they’re not greedy……you think they should have to sell into a falling housing market to avoid triggering Cunliffes CGT?

    30 days to sell $300k+ houses into an island nation market of just 4 million people is one of the most stupidest policies ever.

    Imagine a GFC — sell or get taxed —- Cunliffe is doing nothing more than putting a shotgun to people’s heads – during the mourning period.

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  117. tom hunter (5,091 comments) says:

    you’re

    your

    &@&@(@*@(@)!&#^&@

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  118. chickadee (22 comments) says:

    Well Mr Hunter, my grandparents are old and we look after them like we will do when my parents get old, that is how it works. My grandparents looked after my parents for as long as they needed and my parents looked after their kids for as long as we needed.
    Now it is our turn to do the looking after. Waiting for an inheritance is pathetic. I want my parents and grandparents to spend their money and be happy. We can all take care of ourselves when adults and nobody can take it with them to the afterlife.

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  119. soundhill1 (271 comments) says:

    My wonderings:
    Does anyone know about the old death duties which split up some earlier family farms? Did they have to be paid on the death of the owner/ value of the farm? So farms which had been in the care of a family for more than a generation might no longer be so. New owners of smaller blocks might be new farmers and not so intent on care of the land. Or were they only paid on sale of the farm? Maybe we shouldn’t think of these new “death duties” in the same fashion. Whereas the old death duties would have provided farms for returning soldiers &c, now they would go to Fonterra, which is quite a bit overseas, and other overseas companies, with low-paid jobs locally.

    Key asked Cunliffe about CGT on a “home in a trust”. He did not say “your family home.” Cunliffe needed a way to explain to voters about trusts being used to hold several houses/homes.

    Please explain to me the current situation. If you have to move from your home you own to residential care at some $900 per week then your home has to be sold to defray expenses? So people put their home into a trust so it does not belong to them. (Or they may not trust the people who they expect to inherit from them, so they get more control by setting up trustees and beneficiaries.) If the home is in a trust the money cannot be taken for residential care and the government pays instead?

    Perhaps if the family goes to live in the home it cannot be taken, not immeidately, anyway?

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  120. Ed Snack (1,927 comments) says:

    It appears from comments that this CGT is NOT inflation linked, is that correct ? Anyone know if a capital loss generates and equivalent tax refund. Failure to have both is surely utterly unreasonably unfair and immoral ? And presumably it’s only levied on realisation, and how are those values set, another set of useless functionaries checking every price for every asset sale ?

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  121. tom hunter (5,091 comments) says:

    I want my parents and grandparents to spend their money and be happy. We can all take care of ourselves when adults and nobody can take it with them to the afterlife.

    Obviously I don’t know what the circumstances of your grandparents are but I think you’ll find that at an advanced age they will come nowhere near spending all their savings and investments to “be happy”.

    At worst it might all be spent on nursing home care. Assuming it’s not there will be a money leftover after they’re gone. You’re obviously happy for a chunk of that to go to the state rather than to your parents – money which in turn would have reduced your burdens in taking care of your parents and your adult self.

    Presumably you think that that money passing through the digestive tract of the state will help relieve your burdens just as well.

    Congratulations. You’re no hypocrite. You’re a true-believing socialist.

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  122. themanwhowatches (40 comments) says:

    Cunliffe said a while back that the taxable value would not be inflation adjusted. Of course he could have been making it up on the spot. The effect would be that you pay tax on the increase in value of your property that can (should) be attributed to inflation resulting from Government policies. More broadly, the IRD continuously interprets and reinterprets reviews and adjusts the way tax laws are applied, most often in favour of the tax man, so what would make anybody think that the same uncertainties and anomalies, and in some cases just basic unfairness (look at the current provisional tax policy) will not arise under the hideous complexity of a CGT? There is potential for Labour to lose both the volume of rental capacity (especially that owned by small investors who are people, not companies) and his anticipated revenue because of the complexity and inherent unfairness of the whole system. Once such a tax is installed, who will stop the Greens and others blind to the consequences ratcheting the thing up and up?

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  123. soundhill1 (271 comments) says:

    @tomhunter “At worst it might all be spent on nursing home care. Assuming it’s not there will be a money leftover after they’re gone. You’re obviously happy for a chunk of that to go to the state rather than to your parents – money which in turn would have reduced your burdens in taking care of your parents and your adult self.

    Presumably you think that that money passing through the digestive tract of the state will help relieve your burdens just as well.”

    So where does the state get the money to spend on nursing home care if the family home is put into a trust?

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  124. goldnkiwi (1,545 comments) says:

    ArranH (16 comments) says:

    September 4th, 2014 at 7:37 am

    Unlikely that probate would even be granted in 30 days. Then personal property would have to be dealt with, engaging an agent advertising even if the property did not need fixing up to sell, not to mention family squabbles, what about intestate? God knows you will not be able to get a contractor in because they will be too busy building 27 houses a day. I guess the death tax is a given then. ;)

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  125. goldnkiwi (1,545 comments) says:

    Judith (8,490 comments) says:

    September 4th, 2014 at 7:40 am

    Wouldn’t that depend? What I heard David Cunliffe say this morning was that any CGT would be determined from a yet to be undecided date. The argument there was that if you had owned the property for 30 years, it would not be 30 years worth of appreciation.

    At death one would assume that the estate would be required to settle a CGT up until the date of death and then the clock starts again for any beneficiaries. Otherwise the beneficiaries would be paying the whole lot from that yet to be decided date?

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  126. artemisia (255 comments) says:

    SGA (966 comments) says: September 4th, 2014 at 8:28 am – Curiosity question – Great Uncle Sid bought a Tony Fomison painting years ago for $5,000, and when I inherit sometime in the near future, it’s worth an estimated $100,000. I hang on to it, and a few years down the track I sell it for $200,000 (because there’s been a big international interest in Fomison’s work, say). Under Labour’s CGT ideas, what would I be taxed on?

    Art works are specifically excluded from CGT. So is Graeme Hart’s super yacht.

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  127. artemisia (255 comments) says:

    There is a truckload of questions about the proposed CGT, which will impact nearly all NZers over time. How are people supposed to figure out whether to vote for a CGT party if we don’t know what the CGT means.

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  128. artemisia (255 comments) says:

    Ed Snack (1,806 comments) says: September 4th, 2014 at 12:24 pm It appears from comments that this CGT is NOT inflation linked, is that correct ? Anyone know if a capital loss generates and equivalent tax refund. Failure to have both is surely utterly unreasonably unfair and immoral ? And presumably it’s only levied on realisation, and how are those values set, another set of useless functionaries checking every price for every asset sale ?

    Labour’s policy says no refund for capital losses, but they can be carried forward and offset against future capital gains. So if you only have one liable asset and sell it, there is no ability to claim the loss.

    Some 30% of landlords have only one rental property. Of course they may have other CGT liable assets.

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  129. Michael (3,811 comments) says:

    Both my wife and I are in our late seventies. Some people our age “spend the inheritance” by going on overseas trips. If they haven’t got enough cash to do that then some of them reverse mortgage the house so that they can.
    My children aren’t greedy , they don’t care if we leave them any money or not.
    We will almost certainly leave the inheritance to them, apart from some going to one or two charities, but they wouldn’t give hoots if there were some sort of tax that might reduce the amount they would receive.
    Of course some people on this blog will call me a socialist. They would be wrong.

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  130. stevef (4 comments) says:

    This is unravelling extremely fast for labour to keep up. They are using band aids to patch up the objections and finding that they are contradicting themselves in the process. It is clear to anyone that the policy has not been thought through and they most certainly haven’t down a dummy run cross examination of the policy. So for a a political party to be so unprepared and amateurish in their preparation heaven knows how they would actually manage running a government.

    Constitutional convention prohibits parliament from passing retrospective laws so the soonest this would take effect would be mid 2016 but considering the explosion of worms that have crawled out of the can that’s fairly optimistic in my opinion. By the time 2017 comes around if Cunliffe is in power then in all likelihood he’ll be looking at an early exit by the end of 2017 because this single policy issue is going to have a monumental effect on public sentiment, if not for the simple capital gains principles it represents then for the underhand way in which it is inheritance tax by stealth. I don’t have the statistics at hand but the number of family homes, all of which will form part of an inheritance estate at some future date must be in the many hundreds of thousands. Labour have spelt it out clearly on their website;

    Treatment of gains at death: Capital gains on inheritance passed on after death will be rolled over to the heir, and not payable until the gain on the asset is realised.

    Whatever way you try and spin this archaic policy it is a death tax.

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  131. Paulus (2,668 comments) says:

    Kiwi Saver accounts will be subject to Capital Gains Tax thereby reducing the member’s outcome.
    It is the Investment Manager’s b to trade investments thereby attracting CGT every time.
    The only winners will be the Investment Managers, as they always are.

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  132. Michael (3,811 comments) says:

    Bill Gates has the right idea.

    London, Sept 20 (PTI)
    Bill Gates, one of the world’s richest men, has said that he is not interested in using his billions to launch a dynasty and would not leave his fortune to his children.

    The 54-year-old father of three, worth an estimated 34 billion pounds, has unleashed his planetsized brain and the extraordinary dynamism that made Microsoft the all-conquering global software giant to defeat global poverty.

    Gates and his wife Melinda, 44, have three children — Jennifer, 14, Rory, 11, and eight-year-old Phoebe. “I knew I didn’t think it was a good idea to give the money to my kids. That wouldn’t be good either for my kids or society. So the question was, ‘Can I find something that had incredible impact?’ I knew I wanted to do that,” Gates was quoted by ‘The Sun’ as saying.

    So far, Gates and his wife, through their foundation, have given away 18 billion pounds which has helped deliver vaccines to more than 250 million children in poor countries, preventing an estimated five million deaths. “In the 1960s over 20million children died a year. Now that number’s down to somewhere between eight and nine million — clearly that’s incredible progress. I like to get to Africa and India at least once a year. I really like having a hands- on experience. I’m not well known in these countries.”

    However, as for the inheritance of his children, Gates said: “I will give the kids some money but not a meaningful percentage.

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  133. goldnkiwi (1,545 comments) says:

    Labour is lucky to have “Judith’ around to explain their CGT policy for them, perhaps she would like to explain it to DC lol.

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  134. tom hunter (5,091 comments) says:

    @Michael

    As it happens I agree with the idea that you should not simply hand money over to your kids on a platter. It’s a guaranteed way to produce wastrels.

    I recall a story about Rockefeller’s accountants and lawyers telling him the same thing over a century ago when he was comparatively richer than Gates. Of course it still did no good. Even the relatively small percentage he left he heirs produced a family of Democrat supporters who either had no idea how wealth was produced or sneered at their ancestors ability to do so.

    However, that’s not what we’re talking about here. We’re talking about leaving a portion to the government, the state.

    You should note that Bill Gates is not doing that. In fact he’s doing everything he can to avoid leaving it to the state.

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  135. artemisia (255 comments) says:

    Not sure that a CGT following inheritance is necessarily a major if a family home is sold in the short term, though not within 30 days. CGT would only be calculated from the date the property ceased to be the family home.

    The 30 days seems too little time to obtain probate. However some assets, eg shares, could be sold very quickly by the executor.

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  136. soundhill1 (271 comments) says:

    @Michael

    Third world deaths would have increased as sanitation did not keep up with population growth. A lot was diarrhoea of infants. That is overcome considerably by oral rehydration. (Like what Scientific American is saying about ebola).

    Gates’ beneficence is often about providing genetically modified food that nobody in Europe wants to buy. Local farmers lose their market and farms to guess who? Gates’ family has lots of money in Monsanto.

    New Zealand people with a freehold house may be able to pay a clever accountant to form a trust so that the state has to pay for their care. They then live off the backs of the people whose properties are sold to pay for their care. Things need to be made fairer. Those people who proclaim they don’t support a big state, then proceed to live off it!

    Quite a few years back Presbyterian Social Services sold their rest homes and started to work to support people in their own homes.

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  137. Michael (3,811 comments) says:

    Tom,
    Bill Gates has probably paid enough tax so as to feel he doesn’t need to leave any to the state. But the way he is getting round it is to donate money to charities.
    Could not posters on this blog do the same sort of thing?
    Reverse mortgage the house so there is not much equity in it spend the money they receive each year on holidays or give it away to charity, so that when they die there will be very little tax to be paid.
    That’s if they want to avoid paying the government anything, or very little.

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  138. Michael (3,811 comments) says:

    Another billionaire that doesn’t want to leave too much money to his children.

    WARREN BUFFETT, the chairman and guiding genius of Berkshire Hathaway, the phenomenally successful holding company, is worth at least 60 billion. But don’t bother being jealous of his three children. Buffett does not believe that it is wise to bequeath great wealth and plans to give most of his money to his charitable foundation. Having put his two sons and a daughter through college, the Omaha investor contents himself with giving them several thousand dollars each at Christmas.

    Buffett is not cutting his children out of his fortune because they are wastrels or wantons or refuse to go into the family business — the traditional reasons rich parents withhold money. Says he: ”My kids are going , to carve out their own place in this world, and they know I’m for them whatever they want to do.” But he believes that setting up his heirs with ”a lifetime supply of food stamps just because they came out of the right womb” can be ”harmful” for them and is ”an antisocial act.” To him the perfect amount to leave children is ”enough money so that they would feel they could do anything, but not so much that they could do nothing.” For a college graduate, Buffett reckons ”a few hundred thousand dollars” sounds about right.

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  139. goldnkiwi (1,545 comments) says:

    I personally think giving it to ones family while alive is better than giving to charity, charity starts at home. I would rather watch my grandkids enjoying the benefit of family money than top heavy charities.

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  140. lolitasbrother (749 comments) says:

    Several days reading here for me. Surely this tax will take several points off Labour at the polls.
    People not owning homes will get no particular benefit, and owners will vote against it. When my Dad died it took me four months to do the work. You need a year to sell a home properly.

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  141. Michael (3,811 comments) says:

    soundhill
    I don’t really care what Bill Gates does with his money. If I were him I wouldn’t do what he is doing, I would be more inclined to give the money to the World Wide Fund for Nature, or something similar [and I have a provision in my will to do just that].
    I reckon the world is far too overpopulated already.

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  142. Michael (3,811 comments) says:

    goldnkiwi
    Ok , if that is what you would rather do , fair enough. But no way would I do that. My daughter and her husband took their children to Disneyland, the Grand Canyon, etc., etc last year. They saved up the money themselves. The eldest girl [17] earnt some money by delivering circulars [junk mail]. My wife and I and her husbands parents helped out with a bit of spending money. It wouldn’t have been the same for them if we had “shouted” them the trip. In fact they wouldn’t have let us “shout” them. They prefer to be independant.

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  143. soundhill1 (271 comments) says:

    @Michael “I don’t really care what Bill Gates does with his money. If I were him I wouldn’t do what he is doing, I would be more inclined to give the money to the World Wide Fund for Nature, or something similar [and I have a provision in my will to do just that].
    I reckon the world is far too overpopulated already.”

    WWF is providing “environmental certfication” to large scale GMO farmers in return for protection of 10% of the deforestation. Great then get government subsidy to provide biofuels for an ever decreasing amount of people and cars instead of keeping habitat for them and animals.

    Now how about some answers to my trust questions?

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  144. SPC (5,775 comments) says:

    Allowing the children 30 days to on-sell the estate to avoid change of ownership kicking in the CGT liability is generous – and your attempt to quibble about it has all the sincerity of a partisan hack.

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  145. tom hunter (5,091 comments) says:

    30 days to on-sell the estate to avoid change of ownership kicking in the CGT liability is generous –

    Generous? Have your parents died? Serious question.

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  146. Michael (3,811 comments) says:

    soundhill
    I don’t know anything about trusts. I have always felt that most people who operated trusts did so to avoid paying some tax, but my lawyer tells me there is not much benefit in having a family trust now days. Not that I was wanting to set one up , she just asked me if I had one,and I said I just thought they were a means of tax avoidance.
    When I was working it was always PAYE so I always had my tax deducted before I received my salary.

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  147. wreck1080 (3,969 comments) says:

    I read a great editorial while in the US about the odiousness of death taxes.

    The writer described it as the taxman reaching into your dead parents pockets and stealing their money.

    Key should really hit labour out of the ballpark with this.

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  148. The Bangles (91 comments) says:

    The Labour party has again showed their true colours. The reds are the communists, is it any wonder the Labour party is also red. Now as I was saying, those who claim to own a house will be really upset. And why am I not one of them? Well, if you pay the full cost of your mortgage, and say I now own it, what will happen if you don’t pay your rates? The city council and their storm troopers will take your house. Or what if you fall in love with somebody, who doesn’t really love you, but knows you have plenty of wealth. You buy a house together, and one day they say I want a divorce. Well you won’t own the whole house anymore.

    So as far as I’m concerned you either own it or you don’t. If you can have it taken by someone who fools you into thinking they love you when they don’t, or by missing a few rates payment, then you can understand why I don’t intend on owning a house, unless I can find a way to pay all of my rates in advance, and still own it even in the case of a divorce. Realistically I think I’ll invest elsewhere, until these silly people make real laws. But in the meantime, this is another way in which you think you own a house, but you can also lose the value of it, due to something unforeseen. Oh, yaa in regards to the situation of a divorce, one possibility is to buy two apartments next to each other, they own one, you own the other.

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  149. Michael (3,811 comments) says:

    Best way to have the children avoid the tax is to not leave them any estate .

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  150. Michael (3,811 comments) says:

    Bangles
    I paid off my mortgage over 30 years ago. This new tax that has been proposed doesn’t bother me a bit. I asked my wife what she thought about it and she reckoned it was all a storm in a teacup.
    She just said when you are dead , you are dead.
    I mean you can’t take it with you. I have never seen a hearse towing a trailer full of money.

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  151. burt (8,316 comments) says:

    Michael

    Exactly, and if you leave nothing behind that’s OK because the state will fund your children into an education, a house, a job and even a rest home. The state owns you Michael – because you want it to and you vote to enable that.

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  152. soundhill1 (271 comments) says:

    The Bangles: “Realistically I think I’ll invest elsewhere, until these silly people make real laws. But in the meantime, this is another way in which you think you own a house, but you can also lose the value of it, due to something unforeseen”

    Anything you own is spilt in a divorce. A home in a trust specifies who are beneficiaries which may not be the spouse. You do not own it if it is in a trust.

    Trusts have been allowing families to force the state to pay elder care.

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  153. SPC (5,775 comments) says:

    tom hunter, it only has to be put on the market within 30 days (and yes).

    Anyone can manage that.

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  154. tom hunter (5,091 comments) says:

    She just said when you are dead , you are dead.
    I mean you can’t take it with you. I have never seen a hearse towing a trailer full of money.

    This was covered earlier but it’s your call.

    Exactly, and if you leave nothing behind that’s OK because the state will fund your children into an education, a house, a job and even a rest home. The state owns you Michael – because you want it to and you vote to enable that.

    He’s also voting to enable the state to own his kids. But remember, he does not think he’s a socialist.

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  155. The Bangles (91 comments) says:

    Michael in regards to your question, I’ve been doing a little research on trusts. The rich, politicians and others set-up trusts. What it does is it protects you from legal plunder. The protection is in the form of “contracts”. If I put a $million in a trust, that is well and truly my own money, and it is definitely going to do something, it has a particular purpose, this is no longer my money.

    So if after setting up this trust, I get married to someone who’s only after my money, they can’t touch that $million because that is going somewhere else. And if my business collapses in twenty years time and I declare bankruptcy, that money has been earmarked elsewhere.

    However, that is a very specific condition, it has been earmarked to go elsewhere, it is no longer my money. So if people set-up a trust and say its to go to me, that won’t grant you any protection at all. Also their’s the ‘deed’. In a law dictionary ‘deed’ means to give away. So a trust deed is a document that says this is 100% my money, it is not borrowed and I’m giving this away. If the money was borrowed, and you put the borrowed money in a trust, the trust is null and void, it has to be 100% your money. And if you gained the money by selling illegally, it doesn’t count as your money. I asked Judith Collins about the bill that says we can take your assets if you sell illegally, and asked about Swiss banks. She can’t do a thing about Swiss Banks, she can discourage it, but once its in their vaults, too late.

    So what I’m saying is trusts can protect people from silly issues-legal plunder, but it has to be done a certain way. I hope this gives you some idea in regards to your question.

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  156. tom hunter (5,091 comments) says:

    tom hunter, it only has to be put on the market within 30 days (and yes).

    Anyone can manage that.

    Really? Because most of the people I’ve known whose parents died, went through a fair bit of grieving, even when the death had long been expected. Place on top of that the grieving that recurred as they moved through their parents stuff, deciding what had to be chucked out and what should be kept, bursting into tears at the flood of memories as each item was handled.

    You must be one tough bugger.

    As pointed out above even the probate might take 30 days, and then there’s the time required to get the place ready to sell (it may take some fixing up), plus the time to actually sell.

    And you’d like to have an IRD agent watching over them with stopwatch in hand while all this happens.

    Tell me again about the heartlessness of the right-wing. I love hearing that shit.

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  157. SPC (5,775 comments) says:

    Tom, the time taken to sell is not at issue – it only has to be on the market within 30 says. The state of the house can be dealt with while it is on the market (a reserve price prevents sale till work to maximise value is undertaken).

    Personal items can go into storage.

    The IRD have nothing to do with events.

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  158. The Bangles (91 comments) says:

    Michael, the attraction of mortgages is that you can own the house. And if I owned a house, I would want the people I love, to use it while I die. Rent means you have it temporarily, ‘owning’ it means you own it for life, and can pass it on to the people you love, at least that’s how I define it.

    Soundhill1, I understand how divorce law works, which means any money you’ve accumulated is also affected. But my point is that these real estate people, use the word ‘own’, and to me their is a difference between being able to use it temporarily-rent and permanently-ownership.

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  159. tom hunter (5,091 comments) says:

    The IRD have nothing to do with events

    Now you’re just being obtuse as well as callous.

    The IRD will necessarily be at the centre of this, especially if the rules are not followed exactly.

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  160. Michael (3,811 comments) says:

    Burt
    But the state doesn’t fully fund anyone that goes to University. In my day, 1940’s early 50’s no-one had to pay to go to school. I don’t think anyone had to pay to go to university either, but I left school at 16 after getting my endorsed SC, missed out on UE by about 10 marks, but it didn’t matter because I was never going to go to University and you got the same pay for having endorsed SC.
    What do you mean the state will fund you into a house and a rest home? I know if I went into a rest home I would have to pay .
    Am I missing something here. No-one left me any money and no-one left my wife any money, but we got by ok.

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  161. Michael (3,811 comments) says:

    Bangles
    Why would any of my children want my house?. Two of them have their own houses and the other one has an apartment in Wellington.

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  162. SPC (5,775 comments) says:

    tom, how? The IRD would only be interested in homes that were not placed on the market within 30 days.

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  163. Michael (3,811 comments) says:

    I don’t agree with many of Labour’s policies but I can’t see anything wrong with this one.
    Those who are arguing against it sound like they are whingeing just because it is a Labour party idea.

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  164. Odakyu-sen (752 comments) says:

    If you want to teach your children the value of money, don’t give them any.

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  165. SPC (5,775 comments) says:

    A question for DPF.

    If your preferred CGT included the family home, would that not include a CGT on the estate property (death duty)?

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  166. The Bangles (91 comments) says:

    Michael, that’s fine, if your children have their own house great. But as far as other people are concerned, they may want to pass what they own on to other people.

    Oh and Soundhill1, if you look at section 6 of the property relationships act, it states that Maori Land is not affected. This is in regards to my comment posted at 3.10 PM, about the property being split in half. The property relationships act is all about how the property is divided in the case of a divorce.

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  167. soundhill1 (271 comments) says:

    @The Bangles: “Soundhill1, I understand how divorce law works, which means any money you’ve accumulated is also affected. But my point is that these real estate people, use the word ‘own’, and to me their is a difference between being able to use it temporarily-rent and permanently-ownership.”

    If you have a mortgage you assign an interest in the house to the mortgagor. But I believe only usually to the amount of the purchase price, and not to any capital gain.

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  168. The Bangles (91 comments) says:

    Soundhill1, I’m not saying you end up with nothing. I’m just saying that real estate people and banks shouldn’t be using the words ‘own’ without explaining the conditions. Divorce is a common thing, so their’s actually quite a lot of people who will lose their house or at least some of it in a divorce.

    In regards to keeping an interest via the mortgagor, you’ve also said only to the purchase price. The price of property usually goes up, so if you were to go with this idea, and continue to pay, by the time you’ve finished paying you still wouldn’t have full-title to the house. The house’s worth is the purchase price plus the accumulated gains.

    There’s also the issue that 99.9% of the time, when the carer of the child goes to family court they end up with the child, the use of the house, and the other person pays alimony, now do you see why if I do buy a house it will be an apartment or two?

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  169. maxwell (56 comments) says:

    This afternoon Cunliffe is backtracking from the one month period
    and instead saying, for the moment, that a “period of grace” will be allowed.

    How long that can be will be decided, after we’ve voted, by a panel of “experts”.

    These clowns have had 6 years to develop this flagship policy that they are hoping will pay for their bribes
    and they can’t even get basic details agreed upon before putting it to voters.

    They are making it up as they go along.
    Certainly not ready for Govt., barely ready for Opposition.

    If your last parent dies suddenly who do you ring first ? – the rest of the family, the undertaker, the vicar
    or a local land agent and a CGT lawyer ?

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  170. tom hunter (5,091 comments) says:

    If your last parent dies suddenly who do you ring first ? – the rest of the family, the undertaker, the vicar
    or a local land agent and a CGT lawyer ?

    Your local IRD office – but as per SPC above, they’ll simply warn you that you’ve got 30 days and until you break the law they won’t care.

    But no pressure.

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  171. The Bangles (91 comments) says:

    Well said Maxwell, another blogger called Meatloaf told Cunliffe that I had no confidence in his ability with numbers. As you may or may not know, the so-called official numbers were that 33% of women get into a violent relationship sometime in their lives. Well that’s big isn’t it. But wait a minute if each of these women got into 20 relationships, and one was violent.

    That means that 33% / 20 = 1.67% of men are violent towards women. So Cunliffe goes on and on about men being violent to woman, but he uses misleading statistics to make his point. And then before anyone can do the math, he says $70 million to women’s refuge. Nor did he explain what the police’s definition of violence is. That any kind of grabbing is light assault. So if a woman with a criquet bat comes to attack you, and you hold them back, you are guilty of mild assault.

    Cause, you see if you report a women being violent the police will be skeptical, but if a woman reports you, they won’t be so skeptical, so for this reason the statistics are all skewed to begin with. And that’s when Meatloaf (the blogger) told Cunliffe he had no confidence in his ability with numbers.

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  172. soundhill1 (271 comments) says:

    No-one has answered my question about the state paying for elder care, which is a presumption of family trusts?

    And no-one seems keen to talk about the philosophy of CGT.

    Thinking about elder care if we want more, should we tax higher the business which sits around waiting for capital gain on the building or the one which works at providing the care in it?

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  173. Ross12 (1,456 comments) says:

    Tom Hunter —SPC has not heard of probate. The 30 days is just a figure plucked out of the air on the spur of the moment.

    Labour have had this CGT policy for 4 years. If they cannot get the practical details of it worked out in that time, how can we expect them to work anything out to govern the country properly ??

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  174. Psycho Milt (2,419 comments) says:

    Tell me again about the heartlessness of the right-wing. I love hearing that shit.

    I’m trying to envisage the ‘heartlessness’ of expecting someone who just got given hundreds of thousands of dollars to pay a bit of tax on that income, but it’s pretty slow coming…

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  175. Meatloaf (239 comments) says:

    Soundhill1, I am in favour of radically changing the welfare system. Whenever I have attacked the family court, White Ribbon Society, and have strongly suggested reforming the DPB, here’s the solution I propose. When the great depression hit us, nobody had any money, and we were locked in a great depression as no money was there to circulate.

    So they created a ‘new deal’, where the government would give to those in need, but you paid it back with income tax. So whenever you received a public education, welfare, or working for children via your parents this got recorded on one side of your social security account ledger. Then whenever you paid income tax, this went on the other side of your social security account ledger. The plan was that when you hit the age of retirement, they would say you have contributed $400,000 in income tax, and you have received $150,000 in public education, working for families, and welfare, therefore you have $250,000 to live on, that we will pay out on a weekly basis (not $250,000 in one go).

    But, in 1961, they abolished the social security account system, to a universal social security system, where if you worked you paid income tax, and if you were willing to work or unable to, the state paid. So, under the old system, paying accountants and lawyers for a trust was a silly billy idea, just like wearing loose jeans with no belt, and doing a big dance, and not wearing boxers. But now that we have a universal welfare system, people use trusts to minimise their income tax obligations.

    So going back to the old system, would eliminate this silliness, and it would mean those on the DPB, are using up their pension. If they want to be on it for 10 years, they would have a much lower pension, than those who stay faithful. Anyhow, what I’m pushing for now, is to go back to those days in two stages. For those who have 30 or less years to retire, what I would do is say, if you’ve worked full-time for 40 years, you get a great pension. If you haven’t, you get a lower pension based on how many years you have worked below the 40 years. For those who have more than 30 years, I would go straight back to the old system. I would also give some sort of credit to those who grow trees while looking for work. I would also allow people to borrow to set-up a business provided its a sound business plan. This way those who don’t have the experience, would take the risk, pay it back, and have saved their pension. And those who fail, would have an even lower pension. I know what its like to constantly be told you have no experience. And I am working at the moment.

    Now can you tell me what CGT stands for, excuse my ignorance, please don’t laugh at me.

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  176. goldnkiwi (1,545 comments) says:

    Michael (3,331 comments) says:

    September 4th, 2014 at 2:23 pm

    Perhaps my view has been shaped by having had the benefit of family money. This has ‘advanced’ my situation. I feel that it is incumbent on me to pass it on.

    Equally charities have benefitted more than I think they should have from those same monetary sources and they will get no more from me!!!

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  177. lolitasbrother (749 comments) says:

    I have been over at ‘the Standard’ giving them a thrashing, on CGT. This is their election loser, along with IMP.
    Where is Hone when Dotcon needs him.
    I am working there under my real name Paul Scott, and I make direct accusations to Greg Presland, who seems to be leading the charge backwards .
    I say that because of CGT policy and the IMP lunatics the Centre right has this election back in the bag again.
    I say that CGT makes black emails white and meaningless
    It seems some social conservative people are crossing over to Craig or Peters . My one fear is that a return of less than 5% for either, is dangerous. I think there will be a claw back to NZ
    Nat. I think Key will be feeling in good shape.

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  178. Michael (3,811 comments) says:

    goldnkiwi
    Ok , so you were helped by having the benefit of family money and you feel you should pass on that benefit . I can’t argue with that.
    But I have done alright without the benefit of family money, because my parents had none to pass on to me so I don’t feel any obligation to pass what I now have on to anyone else. However, having said that, my children will get a reasonable amount , providing neither myself nor my wife have to go into a rest home at some stage, because that will reduce the inheritance to a greater or lesser degree depending on the time spent in that home before death.
    My favourite charity is the WWF for Nature, mainly because the way I see it people can look after themselves, but animals have a problem ,specially with poachers etc. I also support the blind to a lesser degree because I have quite some sympathy for people who are blind.

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  179. tom hunter (5,091 comments) says:

    I’m trying to envisage the ‘heartlessness’ of expecting someone who just got given hundreds of thousands of dollars to pay a bit of tax on that income, but it’s pretty slow coming…

    You’d make a perfect IRD agent then.

    More than perfect actually since you’d bring to the task the fiery-eyed passion of someone who believes that giving the state ever more money will create a more caring society. No limits baby.

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  180. Meatloaf (239 comments) says:

    Michael, I know what its like to be on a benefit, and constantly told where’s the experience. Having the money available to start-up a business can make a huge potential difference. If it is a sound idea, and new innovative products are created, that’s one less person in the job queue, or more people in demand. China can make alarm clocks cheaper than us. But can they create new games that haven’t been thought up?

    When I go to the games shops, I see just how much they sell for.

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  181. lolitasbrother (749 comments) says:

    About when your second and last parent dies, it is hell and will take all your energy for months, maybe a year.
    Even if you have been given money you will wilt in grief as you prepare the parent home for sale.
    These Labour people are queer morons.
    And we have not even started about the DC family trusts yet.

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  182. lolitasbrother (749 comments) says:

    They are running backwards and throwing out policy papers. Please someone pick these papers up to show New Zealand.
    It will not be long before they say they can not remember anything about CGT policy,
    look here the black papers have turned white.
    Here comes the third debate, I just have to turn away, it will be CGT and IMP.
    If you can Farrar organise someone to record this stuff. Not the blog, the CGT policy . It is historic, .

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  183. Meatloaf (239 comments) says:

    Thanks lolitasbrother, I will have a look at it sometime, and expose these people for what they are. Just so that you are aware, a few months ago I told David Cunliffe that I had no confidence in his ability to work with numbers, as he was a finance minister.

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  184. lolitasbrother (749 comments) says:

    My impression for readers who want the facts here quickly is go to the poster called ‘ the Bangles’ accuracy and good aim

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  185. lolitasbrother (749 comments) says:

    On a post over at ‘the standard’ the question came up.
    Family Trusts
    A Settlor settles in trust the family home . He can not afford or does not [ because he went through idiot accountant ] transfer of title to Trustees or beneficiary
    The Trustees and beneficiary do not own that home in title unless Settlor changes title deed.
    Solicitors and accountants you can vote labour here, we don’t care, it won’t happen.
    The poor old Settlor dies. Morally it is the family home.
    The trustees move in. first the grief and then the greed
    CGT High Court case.
    Are you there DC? no you are not , running backwards are you, its ok we read your policy papers. please tell Greg latest information. he is a lawyer and doesn’t understand

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  186. Michael (3,811 comments) says:

    My last parent was living in England when she died. I didn’t go to her funeral, was looking after my family and paying off my mortgage at the time. One of my cousins who also lived in England represented me at the funeral.

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  187. soundhill1 (271 comments) says:

    @Michael, a caution about WWF. Right or wrong?: http://climategate.nl/2012/08/23/wwf-is-dishonest-wastes-resources-and-ineffective-in-saving-flagship-species/

    @Meatloaf, you asked: CGT or Capital Gains Tax is what you have to pay, if or when your asset has gone up in value since you obtained it.

    If you buy and sell assets with the intention of making a capital gain, then at the moment you are taxed on the gain as for income.

    But say you buy properties to rent out, with the intention of making money by renting out. Then say you wish to move to another area you may find that your properties have gone up in capital value. Or the picture of whether you intended the capital appreciation may be a bit blurry. Some people are thought to be pushing up market prices paying bigger money for them in the hope that they may sell for even bigger prices. So NZers are getting priced out of the market for a home. Compared to incomes house prices have become very expensive here.

    Labour think it would better to tax capital gains i.e. a CGT.

    CGT may bring in a bit of money. We need money to pay for elder care. If people put their property into a trust they no longer own it. If they are not a beneficiary of the trust they may not have enough money to pay for elder care. Then the Government has to pay.

    Waiting for any corrections.

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  188. thedavincimode (6,877 comments) says:

    You can avoid the death duty if you decide to sell the home within 30 days of your parents dying. Charming

    Your criticism is a little harsh given that this behaviour is the established social norm for those of the liebour/melon ilk. Viewed from a selfish/greedy/grasping perspective, this 30 day policy seems perfectly reasonable.

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  189. soundhill1 (271 comments) says:

    @thedavincimode: “Viewed from a selfish/greedy/grasping perspective, this 30 day policy seems perfectly reasonable.”

    Although today it has been said it might be up to 2 years.

    Maybe David was thinking it would give a family time to decide to move into the parent’s’ home, or not.

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  190. soundhill1 (271 comments) says:

    Following from my last article it seems an important factor is to find a way that houses are not being left empty in the hope of a capital gain, so denying their use for accommodation. In Christchurch, before the quakes, I understand it would sometimes pay an absentee landlord better to leave a house empty and somehow work for a tax loss, and wait for a capital gain.

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  191. Nostalgia-NZ (5,281 comments) says:

    Somebody up thread said that there is a Constitutional Law that prevents laws being passed retrospectively. I don’t think that is correct I think there have been at least 3 laws which have been passed retrospectively in the last 40 years or so. The one which I remember very clearly was Muldoon passing a retrospective law which prevented Samoans born before Samoa was ‘granted’ independence from NZ (in 1961) from automatic citizenship. That followed a PC ruling in the 70s which said such people were entitled to automatic citizenship, this was around the ‘dawn raids’ time.

    As for Trusts which I mentioned this morning, there is a sentiment that a person should be relatively ‘poor’ but be the beneficiary or contributor to a ‘wealthy’ Trust. I don’t think Trusts are going to be ‘turned over’ anytime soon because no doubt a number of politicians see, and utilize their benefits. Reading here it’s clear that some have little objections to the CGT for a number of reasons all which seem fair. The target here is the public view as to ‘developers,’ however many developers operate through Trusts and pay tax so I guess it’s reason to beat the drum. Another point is that a fair part of the electorate don’t own their own homes and may find it appealing that those inheriting a home should pay CGT, but I’m not clear that’s what Labour intend apart from if the house is sold then tax is paid on the difference between the valuation at a particular point in time compared to the point of sale. As the comments here show, if they mirror my struggle with what Labour actually intend do – then perhaps Labour should just drop it because they seem to be ‘taking on’ a little water over it. Tactically if JK ‘drops’ tax cuts into the election as it looks he will then perhaps Labour should bail out on CGT citing that they’ll look for a ‘cross party’ consensus on the issue if they become part of a new Government and say ‘yes’ they support tax cuts for lower income workers and also a higher minimum wage. It’s election time after all, and JK is getting a couple of good strikes in on the 30 day ‘grieving’ period. Who ever came up with that, if it’s correct, needs a brain transplant.

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  192. OneTrack (3,229 comments) says:

    soundhill1 – “Although today it has been said it might be up to 2 years.”

    If we wait until tomorrow will it be four years?

    So, in other words, we really have no bloody idea what a CGT under Labour might look like in practise. Why can’t Labour, after six years in opposition have spent some of their well paid time doing their job and coming up with a coherent policy that somebody can form an opinion from about whether a vote for Labour is a good idea.

    Maybe if they hadn’t spent so much time doing “gotcha” politics….

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  193. Rowan (2,538 comments) says:

    “providing neither myself nor my wife have to go into a rest home at some stage,”

    Long overdue Muggy although a rest home would be woefully inadequate, the Mason clinic would be a lot better for someone as delusional as you!!

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  194. soundhill1 (271 comments) says:

    @OneTrack says:
    “soundhill1 – “Although today it has been said it might be up to 2 years.”
    If we wait until tomorrow will it be four years?
    So, in other words, we really have no bloody idea what a CGT under Labour might look like in practise. Why can’t Labour, after six years in opposition have spent some of their well paid time doing their job and coming up with a coherent policy that somebody can form an opinion from about whether a vote for Labour is a good idea.”

    Most of the policies seem well settled. From the Greenpeace climate voter debate last night Labour and National both favour the Emissions Trading Scheme as opposed to Greens and Mana favouring a carbon tax. But as it was said that after the election and Labour success they and Greens would need to get together to decide.

    Labour is proposing CGT which would hopefully make it more possible for NZers to own homes, and make it more useful to have homes rented out rather than empty waiting for capital gains.

    The time to sell by to stop incurring a CGT on the family home would seem to need to be considered further by expert panel and departmental advisers. But we have the general idea. Cunliffe on TV1 late news; “It is not for politicians to set it at that level of detail.”

    And to look back:
    In yesterrday’s debate Key asked Cunliffe whether there would be Capital Gains Tax on a “home in a trust.” That was very tricky, since Key did not say, “your family home.” Cunliffe tried to clarify by starting to say what would not be liable for CGT, but was very quickly shut down by Key’s loud voice and then the moderator moved on before he was given a chance. Trusts can hold any number of homes, and it is only the family home which would be free of CGT. Also the link played on some TV channels has silenced Cunliffe’s microphone, making it look as if he were silent for a lot longer than the few moments he took to think to phrase a reply for voters to hear. What ways are there to stop homes from being left empty waiting for a capital gain, and denying their use for accommodation?

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  195. Meatloaf (239 comments) says:

    Soundhill1, thanks for the tip, yes I know what Capital Gains tax is, I just didn’t know that CGT was referring to capital gains tax.

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  196. stevef (4 comments) says:

    @Nostalgia NZ
    “….Somebody up thread said that there is a Constitutional Law that prevents laws being passed retrospectively. ….”

    NZ does not have a written constitution. That in itself is part of the problem, especially for a nation that also has no binding Bill of Rights and no upper house in Parliament as a check and balance. What NZ does have is a cobbled together set of constitutional conventions and a few pieces of constitutional legislation that can all be changed by a simply majority of Parliament. It is a general expectation and requirement of the rule of law that legislation should only apply prospectively.
    The prime concern regarding retrospective legislation is that it can take away rights or defences or make unlawful those things that were lawful when they were done. The Interpretation Act 1999 sets out this basic principle in s 7: “An enactment does not have retrospective effect.”

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  197. simpleton1 (232 comments) says:

    ON Prime; as I understood it
    David Parker said the family home estate decisions can take time for up to 2 years and no capital gains tax.
    The proviso was so long as it was not rented out during that time.,, and the other proviso was still to be referred to an advisory committee.

    Brilliant as the family home could be empty,,, family go through probate, cleanings maintainence/redecorate etc.,,,,and so will be like the houses of “soundhill” empty as the provisio,,, so long as it is not rented, though rates, insurance solicitors etc. will be adding up all the time.

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