Landlords warned: IRD is watching

Admin November 14, 2020 Portfolio Management

Investors are being warned not to expect to be able to dodge capital gains tax just by holding on to their properties longer than two years.

The “bright-line test” was passed into law yesterday, requiring property investors to pay tax on gains made on properties they bought and sold within two years.

Revenue Minister Todd McClay said it was an important tool ensure property speculators paid their fair share of tax.

The measures will require income tax to be paid on any gains from residential property purchased on or after October 1 this year and sold within two years.

The exceptions are an owner’s main home, inherited property, and the transfer of relationship property.

IRD

McClay said that did not mean investors who held a property for longer than two years would automatically be in the clear for tax purposes.

“We should be clear that the current ‘intention’ test will remain after the two year period. This means that when someone buys a property with the intention of making a profit they must pay income tax on that gain,” he said.

“The proposals in this bill, together with recently enacted rules requiring buyers and sellers of property to provide an IRD number, and non-residents to also provide the foreign equivalent of an IRD number and a New Zealand bank account number, will help Inland Revenue to better identify investors in New Zealand’s residential property and ensure they pay their fair share of tax on gains from property sales.”

McClay said IRD would be watching transactions and would be able to enforce income tax rules on people who tried to avoid their obligations outside the two-year period.

““We have provided IRD with $29 million out of Budget 2015 to focus on property tax compliance. In total, they have $62 million in funding over five years, which is expected to generate an additional $420 million of tax revenue.

“As a result of this investment, as many as 100 compliance officers will undertake this important work.”

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Grow your own five-a-day in a tiny space

Admin November 13, 2020 Around the Home

Grow your own five-a-day in a tiny space

This small garden demonstrates it is possible, with intensive planting, to grow all the vegetables you need to stay healthy, and you don’t need a large space to do it.

Imagine being able to pop out the back door to pick your five-a-day. This small garden is just 10 square metres, but it proves that size is no barrier when it comes to growing vegetables.

The five-a-day garden was created by UK garden specialist Burgon & Ball in collaboration with RHS Wisley Plant Centre. The company set out to show just what can be achieved in a small space, when every surface is maximised.

Crops were chosen for their popularity, ease of growing, and for their suitability to be grown in containers and raised beds. The team also considered the return on space investment – crops that take up a lot of room and are likely to be  cheap in the stores, such as maincrop potatoes, were excluded.

Grow your own five-a-day in a tiny space

Key plants include different varieties of lettuce, beans, corn, zucchini, silver beet, tomatoes, cabbage, squash and herbs. Companion plants, such as nasturtiums and marigolds, were included to help minimise garden pests. They also add a welcome splash of colour and attract bees.

Pick and mix – lettuces, silver beet, beans and corn are mixed with nasturtium and decorative violas, which look great on the plate.

Willow containers were specified for many of the garden beds, because they “look lovely and help grow bumper crops”.

Grow your own five-a-day in a tiny space

The company says raised garden beds have many advantages. Once they have been dug they are never walked upon, so they remain more aerated. They also allow more light and warmth to reach plants, which hastens growth, and of course raised beds make it a lot easier to keep weeds at bay.

But the key points to a successful five-a-day garden are as follows:

* Choose a sheltered spot that has all-day sun.
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* Check the garden every day, even if it’s just for a few minutes. This is the best way to keep an eye out for pests and weeds that should be removed immediately.

* Water the plants low down near the roots. The dense canopy that forms when plants are close together can prevent water from above making its way down to the roots.

* Fertilise the garden regularly. The plants will pull nutrients out of the soil quickly, so you need to replace these. Digging in new compost once a crop has been harvested is recommended.

* Stagger seed planting so you can enjoy continuous crops.

There’s another benefit to a concentrated garden – it’s a great conversation piece and a relaxing place to sit with a morning coffee.

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The Block NZ open home inspires young hopefuls

Admin November 12, 2020 Building/Development

The Block NZ open home inspires young hopefuls

Super fans paid for the privilege of touring the Block houses. Source, photo / Michael Craig

They wax lyrical about space and colour, grin at the prospect of seeing a laundry and gush over views of the Sky Tower, these junior Block-a-Holics. Not for them a trip to the movies or a kick around at the park today.

Their passion is renovation, and they joined a crowd of about 50 in a special pre-open day tour of the four Sandringham homes spruced up as part of The Block NZ: Villa Wars, the latest installment in the wildly popular reality reno series.

The Block NZ open home inspires young hopefuls

Diehard adult fans paid $69, and dropped another $38 for their equally-obsessed kids, to tour the homes.

At the front of the queue was 15-year-old Harry Crawford, likely the show’s most devoted fan – he visited the site regularly during school holidays, delivering baked goodies for the exhausted contestants.

He couldn’t wait to return for a closer inspection.

“I love renovation and seeing how good the houses look. I really want to spice up my renovation skills, and [join] the building and construction programme at my school, Onehunga High School.”

Good mate and fellow renovation buff Sam Parr, 13, joined Crawford.

The St Kentigern College pupil loved the backyard – yet to be revealed on screen – of Auckland couple Jamie Johns and Hayden Campbell.

The Block NZ open home inspires young hopefuls

“It’s done beautifully. I really like modern architecture, I love how liveable it is and the colours and the combinations of colours.”

He dreamed of owning a architecturally-designed home, funded by “buying lots of rental properties”.

Eleven-year-old Emily Holehan travelled from Whangarei with her parents and sister.

The family are mad keen on the show, but Emily was the biggest fan – especially for New Plymouth couple Cat Glass and Jeremy Hill.

“Everything is just so creative and they all have their own style.”

Glass and Hill’s pad, like the couple themselves, was her favourite – its best asset the view of the Sky Tower.

Outside the homes, the Herald on Sunday heard one girl talk elatedly about seeing a laundry, and a boy aged 11 – so excited he scooted away before sharing his name – give his approval to the interior design of the villa renovated by Christchurch couple Brooke Thompson and Mitch Davies.

The Block NZ open home inspires young hopefuls

“I really love this space,” he said earnestly.

“I’m very interested in how people use spaces.”

Adults were also impressed with the clean lines and indoor-outdoor flow of the villas.

Stonefields mum Adrienne Clarke toured the homes with daughters Holly, 10, and Madison, 14, and left with a smile on her face, especially after seeing the efforts of her favourite couple, Glass and Hill.

“It’s feels homely. You can feel Cat’s presence in the house, it’s amazing.”

Four teams of two renovated the villas, and the pair who sell for the highest profit above-reserve will be crowned champions and top up their profits with a $100,000 prize.

Lending to investors grows

Admin November 11, 2020 Lending/Mortgages

Lending to investors grows

The Reserve Bank figures for new national residential mortgage lending show investors accounted for $1.989b of lending in August, up from $1.167b the previous year. Source, photo / Thinkstock

Investors took out nearly $2 billion in mortgages in a month, the latest statistics show – 33 per cent of all new lending.

The Reserve Bank figures for new national residential mortgage lending show that investors accounted for $1.989 billion of lending in August, up from $1.167 billion the previous year.

All borrowing amounted to $5.94 billion, including $624 million lent to first home buyers, and $3.251 billion to other owner occupiers.

The figures come as new restrictions targeting investors come into effect next week.

The Reserve Bank rules will require 30 per cent deposits for Auckland landlords. There will also be a tax on capital gain on any investment property bought and sold within two years.

Labour housing spokesman Phil Twyford said the Reserve Bank figures showed Auckland remained “a speculator’s paradise”.

“This follows analysis by Quotable Value finding more than 40 per cent of properties in Auckland are being sold to investors.”

Mr Twyford said National had tinkered around the edges, including its so-called “bright line” tax, when what was needed was a massive, state-backed building programme.

Finance Minister Bill English said Mr Twyford was wrong, and it was important to look at increases in the number of first home buyers borrowing for a mortgage.

That number had increased to nearly 2000 in the month of August, a jump of more than 50 per cent when compared to August last year.

“That’s on top of borrowing by more than 22,000 other owner occupiers in August. Taken together, the number of first home buyers and owner occupiers – 24,400 – is much higher than the 5600 investors.”

This week the Herald reported that auction clearance rates in Auckland had dropped, together with attendance rates, with experts attributing the turn to investors pulling out of the market because of the new rules.

One mortgage broker said landlords lost their appetite for Auckland from about July when most banks implemented the 30 per cent deposit restrictions.

The Taxation (Bright-line Test for Residential Land) Bill, due to take effect from October, arose from the 2015 Budget and was one of several measures designed to quell the Auckland property market.

It would tax capital gain on any investment property bought and sold within two years, but has been criticised by the NZ Law Society and others, who say speculators will change their behaviour, and the measures will net the wrong people, such as those forced to sell their properties for reasons such as illness or redundancy.

Investor crackdown

• New rules to take effect from next Thursday:
• Residential property investors in Auckland using bank loans must have deposits of at least 30%.
• The existing “speed limit” for high LVR borrowing outside Auckland increases from 10% to 15% to reflect the more subdued provincial housing market conditions.
• Existing 10% speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80 per cent retained.
• All buyers must have a New Zealand bank account and IRD number which will help track the number of overseas purchasers.
• Quick-flick tax being introduced to tax capital gain on any investment property bought and sold within two years.