Labour proposes a 28 percent tax on the profit made when a commercial or residential property is sold, excluding the family home. It applies only to gains made after 1 July 2027 — any increase in value before that date is not taxed — and is generally paid at the point of sale. The party says all revenue would be ring-fenced for health, funding three free GP visits a year for everyone.
Commercial and residential properties other than the family home are given an opening value at 1 July 2027. Only the gain above that value can be taxed, so nothing earned before that date is captured. The document says several valuation options would be available, following the 2019 Tax Working Group’s recommendations, but does not settle on one.
The taxable gain is the sale price, minus the purchase price (or the 1 July 2027 valuation where that applies), minus eligible costs. The cost of capital improvements is deducted, with what the document calls clear requirements to show the work was done.
The tax applies at the individual level, so each owner is taxed on their share of a gain. The document’s example: two business partners each owning half an investment property sold for a $100,000 net gain would each pay 28 percent on their own $50,000.
The tax is generally paid on sale, but not where ownership does not substantively change. Transfers to a spouse, civil union partner or de facto partner are not taxed, nor are transfers arising from a relationship ending or from death. If the property is later sold and is taxable, the gain is measured only from 1 July 2027.
Selling a covered property for less than its cost, including improvements, creates a capital loss. That loss can be carried forward against future capital gains, but it is ring-fenced — it cannot be set against salary or other income.
An inheritance is not treated as a realisation event, so no tax is triggered when someone dies. The document lists inheritances among the exemptions.
These scenarios and figures are Labour’s own, from the document.
Labour’s own forecast, using the model developed by the 2019 Tax Working Group with an updated asset base and assumptions. It is not a Treasury costing.
“There will be a 28 percent tax on any profit made after 1 July 2027 when a commercial or residential property (excluding the family home) is sold. Not a single dollar of profit made before 1 July 2027 will be taxed.”
“Every dollar raised will be ring-fenced to provide all New Zealanders with better healthcare, starting with three free doctor’s visits each year for all New Zealanders.”
“Losses are ring-fenced, so they can only be used to offset gains from the same type of asset, not against salary or other income.”
Points the document defers or leaves undefined. These are gaps in the document, not criticisms of the policy.
Which party holds a published position on which topic.
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