Labour says grace period 'likely' for tax on inherited home
Labour says grace period 'likely' for capital tax on deceased parent's home
By Pattrick Smellie
Sept. 4 (BusinessDesk) - The Labour Party says there will be a "grace period" on the sale of a deceased parent's home before applying capital gains tax to its sale, but exactly how long has yet to be determined.
In response to National Party claims that a deceased parent's home would have to be sold within a month of their death to avoid being caught by Labour's proposed capital gains tax, a Labour spokesperson told BusinessDesk by email "there is likely to be a grace period but details such as this will be worked out by the expert panel prior to implementation."
Labour regards the capital gains tax as central to its "economic upgrade" package of reforms because it would discourage speculative residential property investment.
While the tax would not apply to the family home, National has been seeking chinks in the policy, questioning earlier this week whether family homes owned by trusts would be affected and seizing today on comments by Labour leader David Cunliffe in a radio interview yesterday making it clear that a deceased parent's home could attract the tax when sold by its inheritors.
Cunliffe has confirmed that family homes held in trust will not be subject to capital gains tax when sold, but National's finance spokesman, Bill English, said Cunliffe had nominated a one month grace period after a parent's death before the tax would apply to such a property's sale.
"New Zealand families will be distressed to learn that Labour would force them to sell their deceased parents’ home within a month of their death or face a punitive capital gains tax," he said, claiming Cunliffe and his finance spokesman, David Parker, had given different answers on the question in different radio interviews.
“The more David Cunliffe tries to explain his complicated capital gains tax, the more he ties himself in knots and confuses New Zealanders,” said English.