Labour ‘speculator tax’ aims at housing investors
Rental property investors will be in the gun under a future Labour government, with the party set to announce a crackdown that would automatically sting them with a tax on their profits if they sell within five years of buying.
Leader Andrew Little will announce the plan in a speech in New Lynn that is expected to also extend Labour’s 2012 Kiwibuild plan to fund and on-sell 100,000 new houses over 10 years – although its 10,000 houses a year target is unlikely to change.
The proposed tax crackdown would extend the current two-year ‘‘bright line’’ test, which was imposed by National only last year.
It taxes profits from residential property bought and sold within two years and was put in place because the over-arching ‘‘intention test’’ – which taxes profits only if an investor buys a property with the intention of selling it – is considered hard to enforce because of its subjectivity.
Labour is expected to maintain the current exemptions, which include the main residence or family home.
Little canned the party’s 2011 policy of a broad-based capital gains tax when he was elected leader in 2014. But he is branding the bright line move a ‘‘speculators’ tax’’ and said on Friday it was the right public policy ‘‘to go after those speculators’’ with a targeted tax – while insisting a capital gains tax would crude’’ a measure.
Little’s speech today is the last in a rolling series of announcements on housing policy coinciding with Labour’s 100th birthday celebrations and aimed at highlighting the Government’s failure to get on top of a range of housing-related issues, from growing homelessness to soaring prices and a shortage of new and affordable houses.
They have included a pledge of $60 million over four years to boost emergency housing for vulnerable Kiwis, and earlier promises to ban foreign-based investors from buying existing homes. be ’’too
At Labour’s special centennial conference yesterday, Little said he would turn Housing New Zealand into a ministry instead of a corporation, so it no longer acted as a ‘‘cash cow’’ by paying over $100m in dividends to the Government each year.
Instead, the money would go towards building at least 1000 state houses a year until there were enough to meet demand, while stopping the Government’s sell-off of existing homes.
Labour is expected to hold off until 2017 – election year – to flesh out the plans for its state house building programme.