Blatant profiteering

We looked at a property about a month ago way up in the back of beyond with a price tag of $49,000. That was about right for where it was. It had been papered and painted throughout, very basic and very small.
We were told a laywer was champing at the bit to buy it, and was awaiting the present contract to expire.
And so he bought it.

It is advertised this week at $79,000

Not a bad profit for signing a few bits of paper !!!!!!!!
By the look of the photos, he certainly hasn't moved into it.

cheers
Jan

I saw a lovely property up here a few months ago, about 90 acres of clean grazing, water, no house. It had been sold to the then owner for about $160k by a guy he knew, who'd owned it for a long time. The price tag was then around $360k. I saw half of it listed again a couple of days ago for $420k. Somebody has seen an opportunity and simply milked the profit. Now some rich alien will buy it and more of my community will belong to people who don't even live here.

Leaving the "richer" but former "local" Owner (or their offspring if its a deceased sale) to move off to somewhere else of their choice, no doubt purchasing something that would have remained out of their reach by any other method.

There are quite a few Kiwis in Aust. just trying to get and afford back "home".
Most of them couldn't have afforded to stay and buy (and I am not talking about recent years either, lots have been here on and off since the 1970's), so they came over the ditch to do what they could to afford to buy back home.

In the meanwhile, NZ bureau of Stats classes them as "overseas investors", your papers do the same, and all the home based Kiwis jump up and down about "rich aliens" and other such likely terms.

I wonder how many are like Hubby, who remains a Kiwi citizen, cannot vote in the country where he pays the most taxes, yet has blood lines going back into NZ history via Nga Puhi lines.
Yet isn't classed as a Kiwi property owner simply because he works very hard in Aust to afford to buy back his "home"...because some "local blow-in" subdivided it, profiteered from it and moved on.

Alien was the only term which came to mind at the moment I wrote.

It's those who buy and sell simply as speculators who get up my nose, making it far more difficult for those who really want to get (back) onto the land to do so.

I know, Isla, I understand from your posts that you are not wanting to offend... but on the same side of the coin, I know that others see it very differently.

I just wanted to highlight that those buying in NZ and who could be classed as "absent" owners, are just as likely to be a Kiwi just wanting to come "home" at some point with their families (ie me).

It annoyed me greatly when we received the NZ Bureau of Stats forms that Hubby would be classed as an "overseas investor".

For myself I don't mind, because I was born o/s and live o/s. My heart doesn't yearn for the country as it does for Hubby.

However I feel those stats will misinform the public and that others reading "the headline" will think they (and "their" lands) are being invaded by people who they see as having no right to purchase and one day live and own in your beautiful (if cold:() Country.[8D]

Good point. We have a newish Kiwi friend who has lived in Oz for most of his adult life and has recently bought in the area. He'll not come back to live on the property for another couple of years, so theoretically he's an absentee owner, but we know he'll be there before too long and be a part of the community, which is quite different from someone who just buys to subdivide or wait for the price to rise.

Yes, a fair point and example.

Hmmm, devils advoate here, i am a person who would love to have the balls to make money out of proerty/land, it seems the best method in New Zealand, especially on the tax front. Surely the bad person is the one who buys it?

I am still fuming over this one as we would have bought it to LIVE in it and be mortgage free for a while. But instead, this lawyer bought it simply to fleece some poor unsuspecting soul.
I thought the legal profession had to abide by a code of ethics. This does not seem very ethical to me.

I can understand buying property, living in it for a few years and then onselling for profit - that does not worry me in the least. But the speed of turnaround on this one is quite mind boggling.

Cheers
Jan

quote:Originally posted by ronnie

We looked at a property about a month ago way up in the back of beyond with a price tag of $49,000. That was about right for where it was. It had been papered and painted throughout, very basic and very small.
We were told a laywer was champing at the bit to buy it, and was awaiting the present contract to expire.
And so he bought it.

It is advertised this week at $79,000

Not a bad profit for signing a few bits of paper !!!!!!!!
By the look of the photos, he certainly hasn't moved into it.

cheers
Jan

If iam reading this right, you did not put a contract in? Also its back on the market but it has not sold yet? you could always offer him low?

There are rules in place that require these sorts of transactions to be taxed as the purchaser is acting as a developer - but the IRD seems to rely on honesty as to who actually registers themselves as such, and usually it only seems to be those who need to claim back costs of such work, not those who just buy and sell.

I would also like to see this whole Loss Attributing system scrapped, it seems wrong that those who invest (as opposed to those who buy to live) can claim a loss against their income tax whilst still getting capital gains untaxed - or am I missing something there?

I would be quite happy to see capital gains tax introduced on all but the family home - and the family home defined as the one you live in for more than a couple of years unless you can show extenuating circumstances as to why you had to sell sooner.

And while we are at it - get rid of auctions and seemingly unlimited 100% credit to buy properties, the combination of those two is what in my mind has contributed to this crazy land value increase over the last few years.

Rant over. I'm 100% with you on this one, Ronnie.

But isn't the idea of an investment property the "New Zealand Way" as pensions are virtually unheard of? Sadly prices have gone up because people are willing (or able) to pay more. I think you can own 5 properties before tax becomes an issue (i think).

Tax is an issue from day one for rental properties, but usually only one way - the owner claiming a loss from them to offset their own income tax. LF, not sure what you mean about five properties?

According to the letter of the law, if you buy a property with the intention of onselling for a profit you are liable for tax. Your intention is what matters to the IRD.

There are state pensions here, and a proportion of the population does invest to add to this. I wouldn't call it the NZ way though! What was the NZ way was being able to afford to buy your own 'quarter acre palova paradise' in which to raise your family. Over the last two decades this has been whittled down by backyard developers and slack councils into very expensive 500sqm sections, and new home owners being squeezed out of the equation by overinflated prices...

because of demand Tigger.... if there wasn't demand, then it simply wouldn't sell and no further developments would occur.

In general terms, its very easy to sit back and say its wrong, yet if I am correct, most of us are on our way to living our dream, and fund this by our best endeavours which include hard work and we have paid for our properties (or their repayments) with our net incomes.

Why should any of us be subject to additional taxes? However those of you to have more than one "section" or lifestyle block/titles would be subject to additional yearly taxes in NSW because of One's apparent wealth to be able to own more than one property.[}]

But no one is asset/incoming testing those with Pay TV (yes I am one of those too) have their nails done each week, hairdos, replacement (if not new) cars, substantial holidays etc.
Sure its choice, but shouldn't that be classed as 'wealth" that should be taxed, simply because One excercises their right to obtain these things according to theories on additional taxing the "wealthy" landlord?.

Yet others (and I can think of a few in Hubby's extended family) who would definately think that it is also unfair to own more than one property of any description and adding to the problem of unavailable affordable property... and why they cannot purchase a home.

It would be your fault in their eyes....

Secondly, sure NZ can try dropping the losses against income tax payable, Aust. tried that some years ago, with the end result that people just sold up their rental properties and took their investments elsewhere, and they had to reverse the law change because of the lack of rental properties....

In the meanwhile, if anyone thinks that prices are unreasonable these days, I personally challenge you to sell your properties at below market rates, where you "think" its fairer for those who are unable to afford housing at market rates to help those less fortunate along into their own home.....

Somehow the cynical side of me feels that this is very unlikely to occur... and that all sellers are equally just as happy with the returns being experienced in NZ through property.

I am watching friends struggling to get into their first home - and this is nothing to do with LSBs at all, just plain old urban family homes - and their frustration at being asked to pay $350000+ for a property that a year ago would have sold for $100,000 less - no alterations, no improvements, in most cases no backyards and nowhere for the kids to play.

We're also not talking NSW, we are talking NZ. We are also talking of people who buy with the intention to sell on almost immediately for a profit. Hubby and I have lived in our little family home for 10 years now.

The tax system here is enabling very high income folk to buy up properties as rentals (often the very homes that first home buyers would use to start out with), where it is obvious that rental income will only pay a fraction of the mortgages they take out, with the intention of claiming that loss against their own personal incomes, allowing them to in effect pay less tax on what they earn personally. How is that fair when to the rest of us who pay our taxes in full? How is that fair on those who are now looking at never being able to own their own homes? What effect will that have on NZ society in 20, 30 years time?

So Swaggie, I don't know the answer, but I wish I did . Any ideas?