By Terry Baucher*
When hearing the lamentations about the purported cost and harshness a capital gains tax (“CGT”) will bring, I think of Paul1. Dying of cancer he applied to his UK pension scheme for an early payment. Paul died before it arrived, but his widow still got to pay the tax on the transfer.
I am reminded of Judy and Wayne, hard-working specialist nurses living in Auckland, who also transferred their UK National Health Service pensions to New Zealand. They too got a tax bill for their troubles even though it would be five years at the earliest before they could withdraw any cash. Judy and Wayne could not even withdraw funds to pay the $50,000 tax bill. So, in order to meet the bill, a pair of highly skilled nurses in a sector and city with chronic shortages, sold up and moved to the South Island. A real triumph of tax policy.
Nothing the TWG proposes in its final report will be anywhere near as penal as the present rules for taxing foreign superannuation schemes. Or, for that matter, the financial arrangements and foreign investment fund (“FIF”) regimes that will also remain in place. Amidst some of the frankly hysterical reaction these important details have been overlooked.
The TWG proposes extending the range of assets that will be specifically taxable on disposal. It’s therefore not a CGT in the sense of a specific part of the Income Tax Act covering all capital transactions. Rather it is, to borrow a phrase, a backstop, applicable if the transaction isn’t taxed elsewhere.
I do not read too much into the minority report by three of the TWG members. It is unusual but should not be a surprise: tax experts by their very nature are an argumentative bunch at the best of times and are as divided over the issue as the general public. What is interesting about the minority view is that all three, including long-time CGT sceptic Robin Oliver, support taxing disposals of residential property.
That, together with comments in the report that the Government doesn’t have to accept all the TWG’s proposals about extending the taxation of capital, opens the door for a partial extension only on residential property investment.
The issue will dominate politics between now and next year’s election and the Government will need to decide quickly if the relevant legislation is to be in place before the proposed start date of 1 April 2021. In this context, Inland Revenue’s capability to deliver will be tested, which prompted Michael Cullen to remark that it might need support from countries that have CGT regimes to help get the legislation ready. He and the report also stressed the need of ensuring Inland Revenue is properly resourced and keeps its most skilled staff, which according to Cullen isn’t happening at the moment.
Although a CGT is the preferred option, the TWG report does consider the use of a deemed return method similar to the fair dividend rate applicable under the FIF regime. Table 5.1 of the report suggests that the deemed return method could immediately raise more tax than adopting the CGT approach depending on the deemed rate of return applied:
According to the TWG, the projected revenue from a CGT over the first ten years rises from $400 million in the first year to $5.9 billion by 2030/31.
After ten years CGT would represent 1.2% of GDP and a not insignificant 4.2% of total tax revenue.
That raises an interesting point about how a Government might react if a downturn affected tax receipts from CGT. This was a very real problem for California and New York State in particular in the wake of the Global Financial Crisis. The deemed return method’s predictability of tax receipts is one reason why it might still be an option.
As noted above the broadening of the taxation of capital income doesn’t replace existing rules such as the FIF and financial arrangements regimes. With regard to the FIF rules, the TWG recommends that the FDR method should be retained. It does consider the present 5% rate should be able to be adjusted frequently as economic conditions change. However, the TWG considers the current ability for individuals and trusts to adopt the alternative comparative value (CV) method if it is lower than FDR as;
“anomalous and inconsistent with the idea behind taxing a risk-free return. It also potentially creates a bias in favour of non-Australasian shares because taxpayers are subject to a maximum 5% rate of return but can elect the actual rate of return if it is lower…. If the FDR rate is ultimately lowered from 5%, the Group recommends removing the ability to choose to apply the CV option only in years where shares have returned less than 5%”
Such a move would increase the tax payable by individual investors unless the FDR rate was set at a level which was fiscally neutral. But it highlights the complexity which will still remain if a CGT approach is adopted.
Volume II of the report has the design details of the proposed CGT. Two areas of the design have provoked a fair amount of commentary, the treatment of inflation and the proposed valuation day approach.
At first sight the criticism regarding the proposal to adjust for inflation seems reasonable. But as the interim report noted the tax system doesn’t adjust for inflation generally at the moment. Furthermore, as Cullen noted at the briefing the amount taxed under a CGT approach is often lower than that payable under an annual accrual-based approach.
For example, compare the totals taxable between a CGT approach and under the foreign investment fund fair dividend rate method. Assuming $100,000 is invested, which grows at 5% per annum and is sold after four years under CGT, the taxable gain will be $21,551. This is less than the total of $22,628 taxed under the FDR method (generally no income is taxed under FDR in the year of acquisition).
The TWG proposes that under the CGT approach only gains arising from the date of implementation will be taxed, the so-called “Valuation Day” method which both Canada and South Africa adopted when they introduced their respective CGT regimes.
The potential compliance costs involved have been criticised so the TWG proposes taxpayers should have five years from implementation (or to the time of sale if that is earlier) to determine a value. They also suggest a couple of default methods for assets held on Valuation Day. These are either the straight-line basis or the median method, helpfully illustrated below.
John purchased a small trucking business on 1 April 2015 for $200,000. On 31 March 2025, John sells the business to Paul for $600,000 (i.e. a $400,000 gain).
As a result of the extension of the taxation of capital gains, John will have to pay tax on the capital gain he has derived since Valuation Day (1 April 2021) from the sale of the business (i.e. for the last four years he has owned the business).
Applying a straight-line approach, John will have to pay tax on 4/10th of the gain on sale (i.e. $160,000).
Straight-line method
The median rule determines the deductible cost as the median or middle value of actual cost (including improvement costs), the value on Valuation Day, plus improvement costs, and the sale price.
In 2014 Scott bought a rental property for $500,000. On Valuation Day the property was valued at $450,000. Scott sold the property six years after Valuation Day for $850,000.
Applying the median rule:
Cost = $500,000
Valuation Day value = $450,000
Sale price = $850,000
The median value is $500,000. Therefore, Scott is able to deduct $500,000 from the sale price of $850,000, giving rise to a $350,000 taxable gain.
Without the median rule, Scott would have a taxable gain of $400,000 (i.e. sale price of $850,000 - price on Valuation Day of $450,000) despite only making a gain of $350,000 over the whole period he owned the property.
There is, as you’d expect, a wealth of detail in these proposals including some anti-avoidance provisions to prevent “bed and breakfasting” as a means of accessing losses. Some losses will be ring-fenced but in general most capital losses should be able to be offset against other income.
There’s plenty more elsewhere to consider in the report such as the proposals for KiwiSaver and the surprising suggestion that the Government “give favourable consideration” to exempting the New Zealand Superannuation Fund from tax. I’ll cover these and other snippets separately.
1) Names changed for privacy reasons.
Listen to Terry Baucher discuss the TWG report with interest.co.nz's Jenée Tibshraney:
*Terry Baucher is a tax consultant and director of Baucher Consulting Limited a specialist tax consultancy. He is the co-author with Deborah Russell MP of Tax and Fairness published in 2017 by Bridget Williams Books.
68 Comments
From memory all of the previous taxation review committees since the 1980s and David Caygill (remember him) have also been in favour of taxing capital gains. This Labour govt blinked at last election campaign and decided not to run with cgt this cycle. And arguments such as deemed rate just makes the tax more confusing and unpaletable.
Grandmother with a two bedroom flat; some interest income to cover rates and power but not much money for anyone else. Slugged with a tax bill because public workers in the Council and Wellington have strangled land supply and enabled a building monopoly, pushing the theoretical 'return' on her unit to stratospheric levels relative to her actual income.
Solutions? According to TOP, a reverse mortgage, supposedly (a tax on equity to be born by your estate) or move out of a city and away from things like hospitals or family.
"Fairness".
TOP's proposal is NOT a reverse mortgage.
Their proposal is an interest-free accrual of the tax obligation to be held by IRD until the value of the property is realised when sold, either when the person sells to move to a smaller house / rest home, or at death.
It does suggest that there's an effective inheritance tax to pay and the beneficiaries of the estate would be forced to sell the house to pay the accrued tax bill if they didn't have cash readily available to pay it.
Gonna be an issue when your liability exceeds your actual equity, isn't it? I can't see the country moving to a system where tax revenue is accrued but not collected and still being able to pay for all those televised cat executions Captain Morgan wants.
The TOP policy is typical of economists trying to solve a problem: Pay no mind to the administration, compliance issues and practicalities; the more complex it is, the more appealing it is to other economists. Accountants are guilty of the same thing but in reverse. Very rarely will they produce the most pragmatic and sensible solution.
I presume when you owe IR more than the value of the house no further deemed income will accrue on the house.
This exemption by TOP recognises how bad it would look to drag old people out of their homes because they can no longer work to pay tax despite having no income. Better to wait until they die before taking their home from them.
... I don't recall the McLeod report of 2001 calling for a CGT ... in fact , the absence of one prompted Sir Micky to call it an " ideological burp " ... as if his 2019 report isn't exactly the same ... his drooling wet dream of imposing a CGT upon us all ...
McLeod did say that unlike most of the other OECD countries , NZ had the benefit of a comparatively simple taxation system ...
... the Cullen CGT will screw that up once and for all ..
Mcleod report addressed an imputed returns tax on property as was recommended by the oecd. But then stated that was too much of a political hot potato, apparently the public had already been canvassed on that option with a resounding NO. Why Simmonds from TOP keeps talking about that and others about a land tax is beyond me. Just ideologues. I hardly think the public has warmed to that and never will.
Hi, your memory is correct about David Caygill in that in December 1989 he endorsed a major report recommending a CGT, but by March 1990 it had been dropped. Previously though in 1967 and 1982 working groups both saw merit in CGT but didn't recommend it ultimately.
Just to be clear the deemed return rate is the alternative to a CGT.
"Just to be clear the deemed return rate is the alternative to a CGT."
Although I dont doubt there would be some commentators who probably would like to introduce all of the above simultaneously :)
I didn't realise that the cgt discussion went that far back to 1967. Cgt could become a defining issue in the next election and a mountain that is too hard to climb.
The only reason we are in the top ten on this list is because of the sensible behaviour of our people, reflected in us having historically had relatively low capital gains taxes:
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult
This whole discussion is about dealing with the effects of unfair wealth distribution, which saves us the difficult problem of identifying why it arises in the first place. Dealing with effects is just so much easier than identifying causes.
An unequal distribution of wealth may be fair or unfair. Why is the current wealth distribution considered unfair? Is it because wealth currently accrues to those who game the stupidities of the system best, whether by accident or design? "Just tell me who to blame" is the politicians' game.
I know let's follow Argentina. They were a wealthy country.
No Zach, sorry, it is all about redistributing wealth to our betters. To "Those What Knows Best". Socialism sound good but ends up as a power grab by clever bureaucrats or dictators, it is about Control and manipulation, dressed up in fine clothes as fairness and equality.
Capital gains tax is a symptom of societal decay. It says "Fuck off you jumped up disruptive entrepreneurial types, we don't like you ". Why do you think New Zealand is a more civilised country than America or Britain? Because decent people came here, perhaps?
If you think I'm joking, consider this question:
"What is the capital value of Michael Cullen's pension from State employment?
I have no idea what cap rate to apply, but the return on an index linked government bond would seem appropriate. Does anyone ever do these sums and present them as a liability on the government balance sheet?
Agree with Milton Friedman that a Land Value Tax would be a far better alternative.
But how does what we have currently encourage disruptive entrepreneurial types? It doesn't seem like an abundance of investment in entrepreneurship is NZ's problem right now, rather the opposite. At the moment NZ's problem is being left behind in productivity (thus falling living standards), and all the money is flowing into speculation in land rather than entrepreneurship.
We have adopted a basically Leninist policy of inflation. Inflation rewards those who game the system best, whether by accident or design. This leads to resentment of wealthy people, rather than admiration of their achievement. This is why the discussion about capital gains is taking place, because people feel that the people who have done best do not deserve it. It is a sign of societal decay. Exactly as Lenin forsaw.
Lenin was a very competent bureaucrat, who genuinely believed he could make Russia a better place. Result, bloodshed and terror leading to rule by Stalin. It is a dangerous road. What happened in Russia seems too remote these days, so I use Argentina as an example of a fabulously wealthy country that declined due to the same disease, that is, remedies that made the problem worse.
Keynes explained the process in 1919:
Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.
https://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflatio…
The RBNZ has a 2% inflation policy and keeps interest rates too low, thus transferring wealth from ordinary people with bank deposits (eg pensioners in Nelson with $10,000 in the bank) to high earning Auckland residential real estate speculators (eg Auckland lawyers). Auckland house prices double, then double again, enriching a few and impoverishing many. This is manifestly unfair and destructive to the fabric of our society, as you are aware.
The good news is that New Zealand still has choices and the ship can be turned around fairly easily once we figure out which way is North.
Indeed. And basically that means anyone who has been able to gain land based on earlier efforts to make it more available to more Kiwis now benefits from that debasement of currency. It's no fault of theirs, but it is something we need to be aware of and consider how to address in order to make life more viable for average people (of all ages).
Roger nails the idea that I have been struggling to.
"....This whole discussion is about dealing with the effects of unfair wealth distribution, which saves us the difficult problem of identifying why it arises in the first place. Dealing with effects is just so much easier than identifying causes. "
I am concerned that as a low income person I could build a new house at age 24. And there is no chance now of my children doing the same unassisted. So I see the inequality. But I think capital gains tax is just nuts, and as an aside won't help. It's just a reaction, not a solution of the causes.
Higher incomes for the lower paid. - Stop low skill immigration. Make providers of labour (our kids) really valuable
Can't afford the land. Decrease demand by a policy of stable or reducing New Zealand population.
Poor folk find things are expensive and can't save. Too much money being ripped out of the country by foreign owners. Introduce true market competition and kill the monopolies. (Before you make assumptions, actually I have a right wing belief in markets. It's just that big business does not like them,
and have made certain they don't exist in the businesses they are in.)
Solve those inequality problems by changing how we do things, no need to do it through tax
Thanks for one of the best comments I've read. Our kids cannot do what we did one or two generations ago. CGT will bring in little taxbecause the family home is exempt. What it does do is badly distract from the important issues: productivity, exports, competition, giving young Kiwis a future.
.....unfair wealth distribution..."
Jacinda the 5th highest paid premier in the OECD – Whale Oil Beef Hooked | Whaleoil Media
https://www.whaleoil.co.nz/2019/02/jacinda-the-5th-highest-paid-premier…
Why is our PM with all her altruistic values and statements about fairness, and nz politicians in general paid so extraordinarily high? And dont hide behind the cloak of higher salaries commission. Uk and other countries would have similar HSC bodies. And then theres the perks the pollies and former PMs retain...sheesh
The RBNZ governor is paid more than the Chairman of the Federal Reserve of the United States. Figures are hidden in our case, it seems, but $660,000 a year seems a bit excessive. Discussion of the capital value of his pension is, of course, strictly verboten. (This is where the real rort is hidden, the capital value of government pensions are astronomical. Which is why you never, ever, hear them discussed.)
For comparison the Fed chair gets USD 201,000 as far as I can tell. Just for fun, adjusting for GDP gives an equivalent of about $5500 per annum for our bod, which is not funny at all.
https://www.nbr.co.nz/article/adrian-orr-named-new-reserve-bank-governo…
https://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve
Unfair distribution of wealth anyone?
Makes you want to get a yellow vest.
Over 3 million superannuation for retiring judge! Hahaha. Tbh I am not concerned with what salaried employees of whatever level earn even though some are doing far more nicely than you would ever think. However the virtue signaling politician who is feathering her own nest is hypocritical.
What is the capital value of that pension? We are talking about unfair capital distribution are we not?
$3,000,000 at 1.49% (current yield on inflation adjusted government bond) requires $201,342,280 of capital.
https://www.interest.co.nz/bonds/98015/september-2040-government-inflat…
The fact we don't adjust our brackets for inflation is, to Cullen, a feature, not a bug. This would be fine but he has completely ignored further adjusting the tax brackets or adding anymore, beyond hiking up the two lowest ones.
How many taxpayers, over the ten year time frame of the report, at 3% growth, will eventually end up in the 'rich prick' bracket of $70K? Banks will lend you $560K on that income, but the median house price is still $800K in Auckland. So you're a rich prick when Cullen wants you to be one, but you're still rendered into rental serfdom when it comes to putting a roof over your head, even when earnings hit the top tax bracket.
By far and away, the biggest issues are taxing business sales (no rollover relief on your final business sale before retirement!) and forgone compounded returns on gains taxed out of your Kiwisaver year on year. They are an attempt to give boomers a discount on their tax on their super today at the expense of workers who will not retire for another 30 or 40 years, if at all.
Forced inflation with no indexation
With government (RBNZ) mandated 2% annual inflation, the government guarantees property values will double in 40 years due to that inflation, and because of non-indexation, the government, ensures they will get it all one way or another
Gotta love it. Govt can't reform RMA, Councils strangle land supply, but the owners, who have no control over the wider market forces, get lumped with a bill on nominal gains, while the drones who contribute massively to property price inflation get to just simply keep raising rates or other taxes to meet their own increasing costs.
... I've encountered a new term , kind of like " KISS " ... keep it simple , stupid .. .. except , in this situation it is " WITLS " ...why, it's the land , stupid ...
For any aspiring housing minister ... Nick Smith didn't get it .. Phil Twyford knows it , but ignores it ... and the Crusher seems to be missing in action over it ... guess they're all WITLS in one way or another ...
... we have no shortage of land ... we're comparatively underpopulated ... and yet , land for development prices are right up there with the costliest in Europe or in the USA .... WOW !
"The fact we don't adjust our brackets for inflation is, to Cullen, a feature, not a bug."
Gee that Cullen and his arrogant condescending f manner makes me wild. This cgt will do sweet FA for affordable housing. The fact there is an exemption for the family home means that 2/3rds of the housing market will get money poured into it by homeowner occupiers...thus making the homes unaffordable. Did he think about that?
... at a guess , I'd say you'd have to have it valued for CGT purposes in 2021 ... except for the main house and 4500 sq. metres around it .... include the most valuable outside buildings in the 4500 sqm if you can ...
After 2021 all properties above 4500 sqm in total area will have already been valued for CGT ...
... there's a massive loophole here for lifestyle developments in the future to have blocks under the 4500 sqm threshold ...
... yup , in an ideal world it would be fair ... but if they're wealthy , its London to a brick that they didn't achieve that status by letting jumped up little nerks in parliament derail them with daft legislation such as the CGT ... they'd get their accountants and taxplanners onto it lickety splick ... and never pay a brass razoo ...
The lion's share of the CGT will ( as new taxes ever do ) fall upon the small and medium size investors ... skinning them of their profits ...
Terry : the CGT and the Deemed Rate of Return taxation systems appear to be complicated ways of raising a small amount of extra money for the government ...
... if we really want a " fair " way to take some of the real estate gain and redistribute if to the populence via the government , then surely an annual land tax is the way to go ... simple , cheap to implement , immediate and regular returns , and across the board ... all landowners pay , no exemptions ...
... if the tenants had jobs , they'd be receiving massive decreases in their income tax ... the point to a land tax is to shift the burden away from the productive sector ( businesses / jobs ) , and to place it more squarely upon the nation's natural resources ... land , water and air ...
...proving my claim that tenants would end up paying their share of the land tax and hopefully would be able to do so. In which case I guess it would be tolerable. The yearly rent would have the land tax added to it. As a tenant is using the house and it is practically theirs while they rent it they would need to meet this obligation.
So, hopefully that's sorted out in people's minds. The government, schools, churches and charities can all pay it as well.I just get the impression, possibly unfounded, that people think a land tax would be a good way to destroy landlords.
Not necessarily. A comprehensive land tax is seen as an "efficient" tax by economists because as the supply of land is finite, it is less distortionary. In theory it encourages better use of land as owners will want to generate a return to meet their liabilities. It's particularly good in targeting land bankers and non-residents.
Since you have raised the spectre of schools, churches and other charities, I am wondering how they are affected if at all by the CGT and whether it applies to them. They generally dont make property sales but when they do, and if they had to pay capital gains tax it would take away vital capital from the charitable sector. And would Maori trusts ask for a capital gains tax exemption?
An overlooked aspect of CGT is that once investors capital is to some extent confiscated by Governments whose record of achieving good value for their expenditure is very poor means that capital is no longer available for productive use. In addition most small start up business;'s are partially funded by Bank loans secured on the family home or other property making the available loans smaller thus less money to achieve a viable business, greater risk of failure so a likely increase in risk aversion by potential new small business's.
So add a CGT to the other anti landlord / developer / property investor rhetoric and actual policy - - at some point possibly sooner than people realise - property will cease to become an attractive asset class -- and therefore those with the money or leverage will move into other more attractive asset classes - hell even bitcoin sounds more promising long term than owing property under this coalition.
This has been suggested as a good thing -- as many commentators see these as more productive - however given that renters or FHB's cant and dont actually build new houses -- effectively building will ground to a halt -- or be left entirely to Phl Twyford -- total to date 33 - and even his 10.000 a year will not keep up with the basic need for new homes.
I am involved in two social housing projects - and almost certainly one will be scrapped this year as its simply not economic anymore - and the long term prospects are getting worse daily -
i personally hope they get another term - as teh damage they are doing needs a little more time to show -- and then they will be history for a decade at least -- and NZ first gone forever
Where is this "FHB don't actually build new houses" stuff coming from? A 10% deposit is far easier to scrape together than a 20% deposit for a cheaper home. There's a damn good reason why there's so many first home owners at Hobsonville Pt, and why developers try to market their homes as 'Welcome Home Loan/Home Start Grant' friendly.
Maybe he's implying the the new home buyers don't directly commission the build, the developer does and the FHB just buys what the developer commissions?
Not sure where he gets the anti-developer crud either, no-one is anti-developer for being developers.. some seem to dislike what or where they are developing but thats a different issue.
They won’t get in next time if they campaign on this CGT!
Personally think that it will affect share investors and KiwiSavers more than property investors!
The negative gearing being ring fenced will be more of a problem than CGT but it won’t come I. Anyway.
Every worker that has KiwISaver are the ones who should be worried as well as NZ sharemarket as people won’t bother as much with shares as they are going to become less popular!
This CGT business is a good diversion from looking at real issues. our proposed CGT is like cracking a nut with a sledge hammer. Rules for CGT is already in place for traders and buyers who have clear intention to sell. Most investors buy and build up their equity to save for reitrement >>>>> Most investors buy and hold. So instead of catching the ones you need to catch (speculators) why hammer the investors/business builders/owners who take risks to build them up and who are working hard to build equity/retirement savings. Tall poppy syndrome????John key / Bill English demolished death duty tax to stop the paper shuffle to create work for acc/lawyers. They gave us bright line test to help catch the ones that need to be caught to pay CGT. therefore we should stop this nonsense and get on with building 100,000 affordable homes (if you have a plan) without rebadging to include what was already in Keys/BE's pipeline of new housing construction. BTY 2 yrs for bright line test was enough. be careful, extension to 5 yrs might aggravate the current housing shortage.
KSS. The hassle and cost of compliance is an underestimated cost and CGT will be a nightmare. How about this: a 2% universal, no exceptions death duty and raising the rate on income to say 36% on over 100k and 40% on over 150k? Adjust the bottom bracket accordingly to boost the lower paid' spending power.
If you raise the top tax rate you just discourage the super effective people that produce much of the growth and value in our economy from working as much. They are already earning far more than they need to support their lifestyle, so they can easily just start to cut back and prioritise fun over work.
I was not opposed to a CGT bar the family home until this article on the treatment of shares, specifically those that fall under FDR. I was expecting DDD (dumb dunne dividend) rule to go and the CV which I interpret as a non realiseable CGT also to go and be replaced by a realisable CGT on shares.
I viewed the CGT as an investment leveling mechanism and not a revenue gathering exercise. If the FDR and CV remain in place, rather than just taxing realised capital gains only on all shares then the investment leveling between property and shares is out the window.
Maybe I've missed a trick some where along the line in my interpretation of the proposed CGT detail in treatment of shares. Perhaps someone can enlighten me. I was one of those swing voters who viewed National as having buried their heads in the sand on the housing crisis and voted for Winston in the hope that he would keep Labour from their excesses, CGT excluded. Some hope.
So what's the story for the likes of me? I purchased a 10,000m2 Lifestyle block back in 2012 for $430,000. Property is probably "worth" about $650-700 now however I have no ability to subdivide (private subdivision) so have had no ability to sell some of the land onwards. Will there be any exceptions to the new tax or will I be pinged because I didn't buy a house in town?
@terrybacher - your calculation showing FDR being more expensive is misleading. If CGT replaces FDR then you will be taxed on both the capital gain and the interest. The return for both combind averages out at 10% nominal historically. Therefore, you end up paying nearly double the tax vs FDR.
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