Homes to avoid capital gains tax?

Press, 7 October 1988, Page 5

Homes to avoid capital gains tax?

By

JENNY LONG

The family home had perhaps “one chance in a million of being included in capital gains tax if it was introduced in New Zealand, the Minister of Finance, Mr Douglas, told a Christchurch conference yesterday. Responding to a question about land and assets taxes at a United Realty World conference, Mr Douglas said the Government should have a document on assets taxes available early next year. Capital gains was a complex

issue, and studies of other countries had shown “big holes” in their systems, Mr Douglas said. Studies showed that it could distort the economy, as people held on to their property longer than they otherwise would. Mr Douglas said that if a capital gains tax were to be introduced, the family home was likely to be excluded. In stepping back from capital gains tax Mr Douglas was at odds with a reported comment by the Minister of

Revenue, Mr de Cleene, who said he would like to see capital gains tax in place by next year. Mr Douglas warned homeowners not to over-commit themselves in mortgages. Once inflations rates were low, payments would not decrease markedly in real terms, as they did when inflation was high, he said. Deregulation of the real estate industry was being considered by a team reviewing occupational licensing, Mr Douglas said.

While the public needed protection from “unscrupulous characters,” deregulation could lead to a wider range of services, at cheaper rates. If home buyers could buy all their services including mortgage finance and legal advice from the same place, they would save time and probably money, Mr Douglas said. However, it would involve relaxing the regulations of other professional bodies, such as lawyers, bankers and valuers, as well as the real estate industry.