Property tax Bill passes 1st reading in Parliament

  • 09/09/2015

A bill designed to ensure property speculators pay tax on their gains has passed its first reading in Parliament.

They're supposed to under current law but it's difficult to enforce because IRD has to decide whether they intended selling a property when they bought it.

The bill will require income tax to be paid on any gains from residential property acquired and disposed of within two years.

Family homes and inherited property are exempt.

Offshore buyers will have to have a New Zealand bank account and provide the equivalent of an IRD number from their own country.

The Government has previously said those requirements will provide more information about foreign buyers, but denies it amounts to a register.

"The objective is to target people who want to make a profit from property speculation," said Revenue Minister Todd McClay when he launched the first reading debate.

"We aren't proposing changes to tax law... this is a simple and effective way to buttress it."

The bill comes into effect on October 1.

Labour voted for the bill but said it wasn't likely to be effective.

"We're not going to know whether it works until after the next election," said David Clark.

"You could drive a truck through the loopholes in this bill," said his colleague Clare Curran.

Labour's housing spokesman, Phil Twyford, said the bill was pathetic.

"All the speculators have to do is hold on to their properties for two years and one day," he said.

"The Government's own tax advisers have said it won't make any difference."

The measure was announced in the May budget.

The Taxation (Bright-line Test for Residential Land) Bill passed its first reading 109-12.

NZ First opposed it.