Capital gains, at Least On Rental Property. Effects?
Now my minds going! Its not simple!
If the tax was on “realized gains”The market would freeze up a lot. In Italy houses have lain idle for literally hundreds of years because the owners cant afford to pay taxes due on sale.
If it is on “unrealized gains”. Whew!
I assume it cant be retrospective. But having endured Muldoons retrospective tax change in the Kiwifruit industry, its possible.
So year one, “Unrealized Gains”scenario: Prices fall 20% (see my earlier blog) wiping $36b. Investors lose $24b, & claim $12b in tax losses! Hmmm.
In future after that, when the market rises, (which is always good times) Govt coffers will overflow at a time it dosnt need it, so will spend it like Labour just did for 9 years. When times are bad, investors will get refunds, putting pressure on already empty Govt coffers.
BUT THEN… there will be an equalizing private effect. Investors will have Mr or Ms Taxpersons hand in their pocket during booms, but handing some back in bad times. Countercyclical for investors.
Of course that is a bit like saying they take 3 pints of blood, but give one back.