So now we have ‘ghost houses’ where the speculators aren’t bothering with pesky tenants so they can simply push the valuation up and make their money from that…
Prices are rising so fast that speculators are buying homes and refusing to rent them out, instead looking to sell them for huge profits without the hassle of finding tenants in the interim.
…these ghost houses would add to the ghost jobs Key is forcing beneficiaries to find or get dumped off welfare in a work environment with 5.8% unemployment…
…ghost houses, ghost jobs in a ghost economy where growth is speculative and compassion empty.
The pain those living on the bottom of the heap only gets worse, it is not easing…
Record numbers of people are sleeping rough or in cars this winter as Auckland’s desperate housing shortage makes life harder than ever for those at the bottom of the city’s frantic housing market.
The Auckland City Mission and Lifewise, which work with the homeless, say people are sleeping in cars and outside heating vents at all-night supermarkets and anywhere else they can get some shelter from the cold.
It will not be until the property market pops before the middle classes who are benefitting from National’s get rich quick scheme demand things change for them – and by extension those on the bottom.
I’ve posted comments elsewhere about ‘ghost-rentals’, but, its probably worth a repeat,
At the last Government Census there were 22,000 dwellings in Auckland that were deemed ‘uninhabited’ after repeated visits by census staff and queries made to neighbors of the properties,
Whenever an issue comes up in news or discussions here at ‘the Mansion’ about a particular town i take a minute to have a wee gig at the census data and find as many as a third of the Homes in smaller places in New Zealand are also ‘ghost-houses’,
Lets tho just address Aucklands 22,000 empty houses, for Tax Purposes and with a ‘Interest Only Loan’ from the Banks a large number of such housing will be Deliberately be being used to rip off the IRD,
Because the primitives at the Treasury and Reserve Bank appear not to have bothered collecting information on just how many properties are being ‘Held’ by Speculators via interest only loans we can only take an ‘educated guess’ at how many of these properties are being used for the purposes of tax evasion,
40% of all property transactions in New Zealand are now classed as ‘investments’, so, at least 40% of those 22,000 empty Auckland properties are being used for the purpose of tax evasion,
The Tax Rules, simplistically primitive in their written form simply say this:
To claim tax losses on a rental property the property must ”be available for rent at the market rental for the area the property is in”,
That’s it in a nutshell, the investor does not Have to rent the property for any amount of time during a year it just has to be ‘available’ for rent,
The ‘Interest Only Loan’ of course is the key to these tax evasions, an interest only loan means just that, unlike Ma and Pa with a normal ‘Table Mortgage’ who pays every week part of the Principle of the loan plus the interest on the loan, the investor with an interest only loan is only liable to pay the interest,
With no Tenant in the property there is no income gained, and, the Tax Rules again say that the investor can then claim back from the IRD all the costs associated with the property against ANY other taxable income including the investors wages and salary,
Such costs according to the Tax Rules include: Interest Payments and Bank Fees, Council Rates, Insurance, Lawn Mowing, Lawyers Fees, and, various other bits and pieces all adding up to a ‘free ride’ for the investor,
That ‘free ride’ of course claimed back from the IRD against taxes owed by the ‘investor’ on the wages and salary they are paid is in reality paid by you and me, anyone who weekly pays their income tax and GST is in effect paying for the investor’s ‘free ride’,
The investor meanwhile ‘holds’ the property until such time as its value has climbed to create a suitable amount of tax free capital gains which in light of the Prime Minister’s pathetic drawing of an artificial line of 2 years to denote housing that has simply been ‘held’ for the purpose of resale at a profit, Speculation, might be a few months longer than expected,
‘Ghost-houses’ are in effect an instrument of mass tax evasion…
I wish you people would stop running down the rock-star economy. National is doing its best to reverse the shambles they were left with after the last Labour Party left office.
We are going through a difficult patch at the moment, but there’s light at the end of the tunnel.
If you tin-foil hate-wearers got inside the boat, instead of throwing rocks at it from the banks, this rowboat we are all on would go a darn sight better.
As for Maori land and democracy, just as the earthquake caused exceptional circumstances, National has enacted necessary powers to sort out the mess. National are doing the same in Auckland to sort out the exceptional housing situation New Zealand is faced with.
A new flag won’t fix it, John Campbell can’t fix it, Winston Peters aka Bob the builder can’t fix it, only a strong Government can.
Yawn! oooh
John, i know the name of a good shrink, the delusional, your comment indicating it came from such a mind, can get help you know…
Weak minds demand strong leaders. Do the math – $100 billion in debt in under 7 years makes the Key junta the worst financial managers New Zealand has ever had.
And you love them you ignorant mug!
Is this satire?
National took budget surpluses and a low sovereign debt then borrowed 200m per week to pay for middle class tax cuts. Then raised GST…
There should be a rule that you’re only allowed to blame the previous government in your first term. Damn it gets old so quickly.
The masses marched in file, staring blankly through steel-dead eyes:
“Strong, stable, government. Strong, stable, government. Strong, stable, government. Strong, stable, government. Strong, stable, government….
What about a lying government? What about a government that has a complete disregard for the wishes of its own citizenry? What about a government that is content to let children die in miserable penury from all too preventable ailments? What about a government that views the deaths of 29 men at Pike River as ‘water under the bridge’?
Honestly. Key could bake you people a cake made of dog turds and cockroaches, and you’d ask for a second helping.
To which this govt aint and they’ve had six long bloody years to even get to the point where they tacitly start to admit it.
And that even when it was made an issue for the past year AT LEAST !!!
Six years?…kinda timid , dont you think???
BULLSHIT !!!
Theyve been stringing this along and milking it as far as they could.
WHY?
Because so bloody many of them have vested interests in keeping the staus quo because THEY own property portfolio’s.
Sorry , son – but this govts done SWEET FUCK ALL to rectify a growing health problem that now is coming home to roost to haunt them.
After six bloody years!
It’ll take another govt to finally get off their arse to do anything decisive .
Certainly not this bunch of greedy grasping apologists for the moneyed voting block.
And this aint the country I grew up in letting such disgusting social conditions get this far out of hand.
Hahahahahahahaha! Nice.
Oh John. I was laughing through the first couple of paragraphs, and then I realised you were sincere….
Now I just feel sadness for you.
Are you John Key?
Wow John. You must be the best type of robot there is!
I can’t believe you actually think the Government is trying to fix this problem. This boat you are talking about is sinking and is full of holes. JK doesn’t recall any lie he says and is the worst thing for NZ ever… Also a pawn for wall st NWO.
We’re waiting! In fact we are still waiting for National to fix the “shambles” that they took over in 2008. Fast workers aren’t they!
Watch as the insolvent banks all scramble to for a bailout when this thing blows. Naturally to be paid for by the tax payer so as not to step too hard on the toes of those who benefited from the bubble. Of course this will mean even more austerity for the vulnerable. We’ve seen how this will unfold in glorious detail before (US, Spain, Portugal, Ireland etc), and we’ve clearly learned absolutely nothing from it (which, not to be too tin foil, kinda suggests these things might in fact be deliberately orchestrated).
I can’t help wondering whether the tin foil had wearers will be recognised as being prescient and wise some time in the future.
Of course…one only has to look at the amount of CEO’s caught out in the USA and now behind bars to see that eventually ,…once the ire of the populace reaches political levels and then the judicial realm….
One by one they tumble like a house of cards.
And eventually as well, …those shafting the rest of us here will have their day in court.
So….wait for that , settle back with some popcorn , and then go on a buying spree of houses that suddenly become dirt cheap.
Poetic justice to start buying up the ill gotten gains of the property speculators as they sell off property’s to divert funds into court costs .
They had it coming to them.
WHAT A SAD LOPSIDED ECONOMIC DEBARKLE WE HAVE HERE NOW IN AUCKLAND WHERE VACANT HOUSES ARE LEFT UNATTENDED AS A FIRE RISK AND AWAITING THE PROPERTY BUBBLE TO CONTINUE????
Is this the way the Government intends to stabilise the property bubble???
If labour had let this happen under their era the press would be all over them but this NatZ mob of criminals are left alone with no hassles at all.
I think the government should make a declaration that they consider these houses “owned for the purpose of tax avoidance”. They could then claw back any interest, depreciation, and other expenses claimed in the past, by the owners, against other income. Mind you, I’m not sure about the legality of such a suggestion; the Income Tax Act has a provision which voids any arrangement set up for the purpose of avoiding tax, but the act doesn’t require the department to prove its opinion correct, so the onus might perhaps be on the owners to prove the department wrong.
Mikesh, couldn’t agree with you more, there is a legitimate use for short term ‘interest only loans’, but, for anyone to hold,( i cannot use the word Buy), property for any period of time using an interest only loan would i suggest strongly indicate that there never was an intention to purchase the property in question and thus any gains made from the property must be taxable,
The stopping of the tax evasions which everyone involved knows is the intent of ‘holding’ property with interest only loans will i would suggest only occur at the point where the IRD identifies and prosecutes a mass of those directly involved in the ‘ghost rentals’,
Of course those involved know that the chances of such prosecutions
occurring is practically zero as the IRD cannot proactively investigate any tax fraud where the monetary value of the investigation is likely to exceed the monetary value of the fraud exposed,
The primitives at the Reserve Bank could stop the whole show tomorrow by ordering the Banks to stop issuing long term interest only loans, such loans in my opinion should only have legitimacy for a 3 month period with 1 right of renewal for 3 months,
Those interest only loans coupled with the primitive tax rules are heaven sent as far as those who would defraud the IRD are concerned…
The IRD probably think they do not have power to do anything about this, and of course they may be right. They probably need a nudge from government to test this out.
In an interest only loan interest would probably make up about 90% of the deductible expense. I have opined elsewhere that interest should not be deductible, even in a properly functioning business, since it does not actually contribute to the earning of taxable income.
Govt are stealing/acquiring iwi land “under urgency”. Why don’t they just enact the same emergency powers in the same way and “acquire” the ghost houses “under urgency” to sort out homelessness.
They are a health hazard. They are a fire hazard. The ghost houses are tax dodges. People need housing. Empty houses drive up demand by lowering supply. Confiscate them all, nationalise them all and turn vacant houses into immediate emergency shelters.
Or those who give a damn, can print the addresses of every one of the ghost houses and encourage the homeless and those paying exorbitant rents around to squat them for free.
They couldn’t just do that… The people with those houses are foreign investors who don’t even care about the state of the house only the land. They can do it to Maori though, because they live here…
I feel the economy favours financial engineering over creating proper jobs. These property speculators borrow money from overseas contributing to the current account deficit and smothering the real economy. (These banks had a big role in the financial reforms of 1984).
Conversely I have a poorly paid friend working as a caregiver who has set up a small company and claims everything as tax expenses, there will be a big mess if the bank call in these loans.
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