In brief: How a land tax works

(File)
(File)

Auckland's overheated property market is driving calls for the Government to impose a land tax on foreign property buyers.

Opposition MPs are calling for action, saying New Zealand families are being "locked out" of the housing market.

In brief: How a land tax works

The first hard data on foreign buyers is due out - Land Information New Zealand is due to release information on the number of foreigners buying New Zealand residential properties in the next two weeks.

The figures released will date from October 1 last year, when foreign buyers had to supply their Inland Revenue number from where they are a tax resident. 

The Opposition says the Government is worried and wants to show it is doing something.

John Key says he wants to know the scale of the problem before making any decisions.

John Key also floated the idea on July 26 last year as a way to slow Auckland's house price inflation.

He considers it a stronger deterrent than a one-off stamp duty on foreigners.

He also says it's more acceptable under New Zealand's Free Trade Agreements than outright bans on foreign buying like what Labour is proposing.

John Key says such a tax is possible before the 2017 election.

Yes, by the Government's own tax working group in 2010.

It proposed a 1 percent land tax on all properties and said this would drop property prices by 17 percent. But that applied to all properties, not just foreign buyers.

Targeting foreign buyers could also hit ex-pat New Zealanders - Kiwis who own a house but are living overseas for more than three years may have to pay too.

Tax experts also says foreign buyers could exploit loopholes, such as a registering as a New Zealand-based trust to buy the house.

Newshub.

Share to Facebook Share to Twitter Share to Email
Share to Facebook Share to Twitter Share to Viber Share to WhatsApp Share to Email