Auckland houses 'flipped' for big profits
Real estate guru Olly Newland says it's time for the Government to get serious about a capital gains tax, after Newshub showed him nine examples of huge and quick profits made on the Auckland property market.
It's a practice known as flipping -- buying a house and reselling it soon after, for a big profit.
And while the Government has moved to force house traders to pay tax on quick flips, Mr Newland reckons mum-and-dad investors are still exploiting the system.
A 1960s three-bedroom home in Auckland's Meadowbank was bought on July 21, 2015 for more than $1.4 million. It was sold the next day for more than $1.7 million -- a profit of almost $250,000 in just 24 hours.
The house has since been demolished and the land divided into two lots, and it's set to make hundreds of thousands of dollars more.
It's just one example of many showing the practice known as flipping.
"This is a loophole that we've got in the system that Mr and Mrs Smith of this world can buy a home knowing they're not going to be taxed and on-sell it for vast profits, and move on to the next one," Mr Newland says.
Vast profits alright -- how about making a cool $1.56 million in less than two years? That's what happened with one Remuera property, bought for less than $2.5 million and sold for almost $4 million 21 months later.
"In some countries they tax capital gains on your own home on a declining basis," says Mr Newland.
"There's so much for year one, so much for year two and so on. So year 10 there's no capital gains to pay at all.
"We don't have that here but it's something that perhaps someone can look into."
Other examples given to Newshub shows a capital gain of almost $350,000 made in seven months in St Heliers. But an owner of an Epsom property did even better, making more than $600,000 in just three days.
Mr Newland reckons we're heading towards a bubble and advises buyers to be very careful about over-paying for property.