"Grey" areas in new legislation re "Brightline"
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| 1 | We have a property consistiing of two units on one title joined in the middle by the garages. Several years ago we looked at converting these units into having their separate titles and the extra costs involved. With the advent of the recent legislation we have revisited the project, but there seems to be no clarification as to how these units would be treated under the new brightline rules.- they would have new titles although being owned by the same entity, with a view to selling them separately in a few years. Opinions seem to vary as to whether a new brightline date would apply because of the new titles. Comments would be helpful. Capricorngirl mlarkin - 2021-04-04 14:36:00 |
| 2 | IRD defines your date of acquisition for subdivided land as "The date the person acquired the original undivided piece of land." sparkychap - 2021-04-04 14:39:00 |
| 3 | I think at least one has to be new under the brightline. It could possibly be a new build as it isnt there now and then its there, but thinking how i could get tax off you. ash4561 - 2021-04-04 14:45:00 |
| 4 | sparkychap wrote: ash4561 - 2021-04-04 14:48:00 |
| 5 | ash4561 wrote: No. sparkychap - 2021-04-04 15:01:00 |
| 6 | Because of the new badly drafted legislation being so full of "barbs" and consequences, we have discussed it again and will leave well alone! While we have good tenants of some years standing we do not at this stage intend to sell and we are keeping rent increase to a minimum (not been increased for nearly 3 years). However we still have a mortgage on this property and with the introduced abolition of being able to claim interest as an expense it could well be better to sell within the next few years.We have owned it for some 16 years so not subject to brightline. Capricorngirl mlarkin - 2021-04-04 17:10:00 |
| 7 | Agree the Act is confusing, so presume IRD will provide more guidance sooner rather than later. Some of the latest changes are already in place for this tax year, with interest deductions also beginning this tax year. Not surprising IRD is seriously annoyed at being forced to implement complex changes in a big hurry. Meantime not a bad idea to hang in there as if the supply of rentals drops it will be good news for landlords. A change of government will see a change in regulations too. artemis - 2021-04-04 18:34:00 |
| 8 | Your situation is quite clear. Nothing has changed in the definition I posted above. sparkychap - 2021-04-04 18:36:00 |
| 9 | I agree with your first post sparky - however I don't trust interpretations of pen pushers! Better to just continue as usual meantime! End of financial year and we will be meeting with accountants, so will get their "take" on it and also lawyer - will then judge implications re mortgae interest as well. Capricorngirl mlarkin - 2021-04-04 19:18:00 |
| 10 | If you bought 16 years ago, I don't think you paid that much for them and must of paid a bit off in 16 years so am wondering how much interest you have and how much more tax you have to pay. The interest rates must have reduced to the point the savings there might cover your tax. I think you will just get used to it. ash4561 - 2021-04-04 20:02:00 |
| 11 | New builds going to be a bit scarce in the near future too, due to difficulty getting materials into country. Can't see it getting easier for renters. zirconium - 2021-04-04 20:54:00 |
| 12 | This message was deleted. hooserat - 2021-04-06 23:36:00 |
| 13 | mlarkin wrote:
Wrt what sparkychap said, IRD has issued very clear technical tax guidelines exactly what he said and with additional detail as well, specifically relating to the bright-line test. You can rely on that, well at least until the government decides to retrospectively change it. artemis - 2021-04-07 06:38:00 |
| 14 | hooserat wrote: The bright line acquisition date is when you acquired the land. It doesn't get reset if you build or relocate a house on to it. sparkychap - 2021-04-07 08:54:00 |
| 15 | ash4561 wrote: I love it when people with no idea guess at someone else’s financial position and pontificate. Many LLs have interest only mortgages. The reason for this has been until now that there’s a tax write off for interest but not principal. It’s possible that there’s no or not much equity if the property has been used to buy other rentals too. I’m not saying this is the case but guessing how much someone paid and how big their mortgage is, is more than a bit daft. It’s irrelevant how much the mortgage is currently. Rule of thumb is those with mortgages will get less income with the recent changes On the brightline thing mlarkin, our solicitor had to double check last year when we sold something. We used to own our properties in individual names. So some were his and some were mine. A few years ago, in consultation with our lawyer and accountant we changed them into joint names. It was the accountant’s suggestion for a number of reasons. We didn’t fall under the brightline with doing this. princess52 - 2021-04-07 13:37:00 |
| 16 | Also, if I own my house and the property next door, and i decide to sell both of them as a package deal (attractive to developers), I'll simply offer it as a "buy one, get the second one for $1" deal and offload all the capital gains onto my family residence. Simples :) esprit - 2021-04-07 14:08:00 |
| 17 | esprit wrote:
Would that arrangement be attractive to the developer ?.. now he has on his books property 1 which he in essence paid approx 100% over market price for and property 2 on this books at $1.. I suspect that the developer would then have to do some "fancy accounting" to get it all square.. onl_148 - 2021-04-08 11:15:00 |
