Simon Bridges won't commit to rolling back 'brightline' capital gains tax

Despite opposition to the Tax Working Group's (TWG) recommendations, Simon Bridges won't commit to repealing the existing capital gains tax on homes sold for profit.

While anyone who makes a living buying and selling homes for profit is supposed to pay tax on the gains, it's historically been difficult to enforce.

So in 2015, the National-led Government introduced the 'brightline' rule, which meant any property (excluding your main home) bought and sold within two years would qualify for capital gains taxes, regardless of your intentions.

In early 2018, the new coalition Government increased that to five years.

"We wouldn't have put five in," Mr Bridges told The AM Show on Monday, but wouldn't promise to roll it back to two years or get rid of it, saying he's yet to discuss it with his MPs.

Mr Bridges has been stridently against the TWG's recommendation to expand capital gains taxes, which head Sir Michael Cullen says will make the tax system fairer to people who work for a living. In exchange for lower income taxes, a capital gains tax would hit property investors and business owners when they sell up.

"I don't support anything that this Government has put forward from the Tax Working Group," said Mr Bridges.

"Why on Earth would you then do all the unfairnesses that these guys are going to do, where a $5 million mansion in St Mary's Bay is fine, but a Kiwi battler who has one additional rental in Whanganui or West Coast, gets stuffed? What these guys are talking about is each and every year, at any time, for time immemorial."

Supporters of a capital gains tax say the real "unfairnesses" are being suffered by wage and salary earners, who are taxed on every single dollar and struggle to afford to purchase items that increase in value, or invest in shares.

Simon Bridges.
Simon Bridges. Photo credit: The AM Show

The TWG's suggestion excludes the family home from any capital gains taxes, Mr Bridges pouncing on this loophole and others in a series of Twitter posts on Monday morning.

"One $3.5m house in St Mary's Bay exempt from CGT. One $350k rental in Whanganui or West Coast hammered with CGT," he wrote in one tweet.

"A $1m apartment in Oriental Bay pays no CGT. But a $1m lifestyle block in Ohariu covered in gorse does. As does a $450,000 block in Northland for that matter," he said in another.

"This capital gains tax, as comprehensive as it is, is against the Kiwi way of life," he told The AM Show. "It will be so wrong for New Zealanders."