REINZ warns about lifestyle block family homes
REINZ warns that lifestyle block family homes will be significantly impacted by CGT proposals
If the proposals announced by the Tax Working Group proceed a significant number of lifestyle block owners in New Zealand may have to pay Capital Gains Tax (CGT) on their family home after 1 April 2021 warns the Real Estate Institute of New Zealand (REINZ).
Under the proposals, land that is larger than 4,500m2 is not subject to the family home CGT exemption.
Bindi Norwell, Chief Executive at REINZ says: “Indicating the potential size of the problem, in the last 12 months, REINZ data has shown that 92% of lifestyle blocks sold across the country were larger than 4,500m2. If this is indicative of a normal year’s sales, then going forward, a similar portion of the market is likely to have to pay CGT on the portion of their land that is greater than 4,500m2.
“This is certainly a case of the devil being in the detail of the report as we don’t think many members of the community will even be aware of the impact that CGT could have on their lifestyle block home at this stage,” continues Norwell.
“Should the recommendations make it past the 2020 election, what this means is that we could see a significant number of lifestyle blocks coming up for sale in the next few years as people look to avoid having to pay CGT on their property,” points out Norwell.
“We have repeatedly said that any changes in legislation should avoid being too punitive on one sector of the market, and we will certainly be making a submission to this effect on behalf of those living on lifestyle blocks,” concludes Norwell.