Auckland is unaffordable to us. If you are to buy and hold, looking for moderate capital growth but good rental yield, which city would you pick? For something under $500K.

i-luv-pie - 2020-12-17 20:56:00

There's more to think about than what info you've provided. Are you intending to manage it yourself, or will you have a property manager? If the former, you'll need something within straightforward travelling distance of Auckland. If the latter, you'll have more options, but need to account for the management fee.
Are you intending to live there yourself one day in the medium or long term, or is it purely an investment?
Have you included in your $500k the need to have a buffer in case of unexpected expenses?

luteba - 2020-12-17 21:59:00

I invested in Hamilton last time and get good result. This time, I want to try somewhere else.
I use property manager so distance is not an issue.
I will not live there, so just investment and prepare to hold it for at least 5 years.
$400 - $500K is for buying, I have set aside money for unexpected expenses.
Thank you

i-luv-pie - 2020-12-17 22:06:00

This message was deleted.

mals69 - 2020-12-18 09:18:00

You will be liable for tax as you have just stated in in public that you are buying for moderate capital gain

funkydunky - 2020-12-18 10:03:00

funkydunky wrote:

You will be liable for tax as you have just stated in in public that you are buying for moderate capital gain

1. OP says "moderate capital growth", which is not quite the same thing as capital gain.
2. That will only be an issue if the OP ever sells. Since they're wanting good rental returns, and if they continue to get good rental returns, why would they sell?
3. Tax is only payable if a profit is made. People focus too much on the "tax" bit, and forget about the fact that if they're paying tax, they've made a profit, and if they're paying a lot of tax, they've made a big profit.
4. They haven't actually bought anything yet. They might be looking for capital growth right now, but ultimately decide to buy for rental returns. A hypothetical mostly anonymous comment on a message board is going to be a hard sell as evidence for the IRD.

luteba - 2020-12-18 10:15:00

Wow, just ...Wow

funkydunky - 2020-12-18 10:21:00

Blenheim.

johnston - 2020-12-18 11:46:00

What about Invercargill?

tygertung - 2020-12-18 14:45:00

Gore

shanreagh - 2020-12-18 16:31:00

Taihape

jethrocat - 2020-12-18 17:12:00

luteba wrote:

1. OP says "moderate capital growth", which is not quite the same thing as capital gain.
2. That will only be an issue if the OP ever sells. Since they're wanting good rental returns, and if they continue to get good rental returns, why would they sell?
3. Tax is only payable if a profit is made. People focus too much on the "tax" bit, and forget about the fact that if they're paying tax, they've made a profit, and if they're paying a lot of tax, they've made a big profit.
4. They haven't actually bought anything yet. They might be looking for capital growth right now, but ultimately decide to buy for rental returns. A hypothetical mostly anonymous comment on a message board is going to be a hard sell as evidence for the IRD.

lol have you spoken to ird lately about what they have planned.

gabbysnana - 2020-12-19 07:58:00

I was looking at Invercargill a few years ago and it looked good as you could buy a reasonable sort of house for $100k which just needed a bit of renovation. I figured I could buy one and go down and do it up a bit in a couple of weeks or so and then could rent it out, as there should be lots of students taking advantage of the zero fees policy at the tertiary education.

Didn't end up doing it, maybe I'd just had a baby or something, but it still might be a good idea, although the houses might be more than $100k now.

tygertung - 2020-12-19 08:24:00

gabbysnana wrote:

lol have you spoken to ird lately about what they have planned.

I have and the OP shouldn't lose any sleep.

sparkychap - 2020-12-19 08:49:00

luteba wrote:

A hypothetical mostly anonymous comment on a message board is going to be a hard sell as evidence for the IRD.

Whilst the OP shouldn't be too concerned here, in reality its not the IRD's responsibility to prove you intended to make a profit, but rather the taxpayers responsibility to prove they didn't intend to make a profit (even if capital gain wasn't the main intent).

The beauty of the brightline test is that it removes the uncertainty about "intent" and just ensures that anyone who makes a profit when they sell an investment property pays their fair share of tax on that.

sparkychap - 2020-12-19 08:57:00

johnston wrote:

Blenheim.

As strange as it sounds I agree. A place next door to my mother's house sold recently. A standard rectangle summer hill stone three bedroom with an external steel double garage for $520k. We sold my grandfather's place a little over a years ago for $100k less in the same street and it was a much better house than this one.

sw20 - 2020-12-19 09:10:00