Auckland Housing Crisis

The IRD have the tools in their tool box to take the heat out of the Auckland property market so why are they not using them? The free market approach, as a politically driven idea is fine, but in reality the IRD need to be given the go ahead to implement some simple rules and guidelines, to properly manage what is historically a boom bust business.

Currently, the IRD has to “prove” that an owner buys with the intention to profit from re-sale. Why can the IRD not assume that every purchase, other than the family home, is made with the intention of re-sale and is therefore taxable, if sold within say five years?
Then it is up to the taxpayer to prove to the IRD that they didn’t buy with the intention to trade. Additionally a declaration system could be implemented at point of sale and be subject to exemptions based on proof of purchase.

An IRD register of sales would make sense as the IRD can track transactions that are taxable. The lack of rules around non-resident speculation in New Zealand’s fragile property market is nonsense and the result is made even worse when the IRD cannot collect tax on the profits of ‘outsiders’.

The current method of allowing property investors annual deductibility against other income is ridiculous. Interest should be deductible but be treated like company profits and in the case of rental income losses should be carried forward to re-sale.

Clearly, the New Zealand economy is not robust enough to support such flagrant speculation and we are witnessing the greatest dispossession of our time with our future generations losing hope that they will ever be able to afford their own family home.

Non-resident speculation on existing property should be ruled out of the real estate game forthwith. The IRD can use the tools they have available to them to send the right signals to the market. Action is needed now, as we do not want our economy seriously undermined by a correction that is bound to come if nothing is done.

The Government has lost the plot and the Prime Minister needs to wake up and realise that good governance is about looking after the interests of the New Zealand people and not a market free for all that is about the power of the dollar and not the future of New Zealand.

ENDS

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