[scampi]

This is a for instance thread which I’m sure someone will know the answer too!!!!

Let’s say that someone was happy to buy a house with a view to doing it up and then selling it on for a small or larger profit.

Q1. What tax rate would you pay?
Q2. Are you taxed only on the difference between purchase and sale price?
Q3. Is there a time limit between purchase and sale in order to avoid any tax.
Q4. Anything else which i may have missed when asking this dumb question?

Ta

:nice1

[liamnrach]

This is a for instance thread which I’m sure someone will know the answer too!!!!

Let’s say that someone was happy to buy a house with a view to doing it up and then selling it on for a small or larger profit.

Q1. What tax rate would you pay?
Q2. Are you taxed only on the difference between purchase and sale price?
Q3. Is there a time limit between purchase and sale in order to avoid any tax.
Q4. Anything else which i may have missed when asking this dumb question?

Ta

:nice1

Scampi

Excuse the next dumb question, but where were you thinking of doing this? In the UK or NZ?

Liam n Rach

[scampi]

I laugh when i tentatively say NZ

:laugh :laugh

[barryp]

The answer depends on whether you operate a business offering the property as a rental unit, or not.

If you buy it, refurbish it, and sell it without operating as a rental or occupying it yourself - if you're a flipper - your profits, if any, would be treated as ordinary income. You'd pay tax based on your total annual income, so the rate would vary w/ your other income. Your profits would be a very simple matter (sale_price - purchase_price - improvements) and typically on a cash basis.

Given record high home prices, record low affordability, and very high interest rates (even higher for you than for an owner/occupier), this strikes me as a bad time to start a property speculation career.

[auskiwi]

If you live in the house for any period of time and do it up you can sell it for any profit withour paying any capital gains tax. There is talk at present of tightening up the no capital gains thing here in NZ though, so get in quick!

[scampi]

Thanks people, just an idea as we are handy with the old screwdriver and paint bit (lots of recent practice).

[eternalkiwi]

The current law would require you to pay tax on any regular activity where the intention is to make a profit. Previous court cases have included private property development as a taxable activity, and this even included a retired couple selling off excess land that was too big for them to maintain.

Many people have developed property for a gain and not declared their profit, though as Auskiwi mentioned the Government are focusing on these evasive tactics and so will be harder to avoid in future.

Though you can buy a home for you and your family, maintain and upgrade it as you need without worrying about tax implications.

As NZ's tax system is largely conceptual or descriptive and not prescriptive, like in some other countries, answers can be a little grey and the current Government appear to be increasing the grey areas.

Shawn

[Super_BQ]

If you live in the house for any period of time and do it up you can sell it for any profit withour paying any capital gains tax. There is talk at present of tightening up the no capital gains thing here in NZ though, so get in quick!

As eternalkiwi mentioned, there's nothing wrong buying your home as principal residence and raising your family there. The gain would be tax free because it's the only house you own. But go looking for a 2nd or 3rd house with the intention of doing it up and selling for a gain in short time.... well that's a horse of a different colour.

Many people have developed property for a gain and not declared their profit, though as Auskiwi mentioned the Government are focusing on these evasive tactics and so will be harder to avoid in future.


I've heard of that IRD is also in the game of making $ from those that have flipped properties. What they do is they let the person slide a bit, waiting 2 or 3 years for which then, they'll apply their prescription - which is the interest penalty compounded over the years.

I wonder how effective IRD is at catching those that have flipped properties in NZ and dashed over to Australia?