The National Party recently claimed that the proposed capital gains tax (CGT) may still impact family homes if they are used for home-based businesses or if homeowners decide to take on flatmates, despite assurances from the Government that such homes would be exempt.
“The Tax Working Group’s recommendations would impose a capital gains tax on the family home if 50% or more of the property is used for a business or the owner has taken on flatmates to help pay the mortgage,” said Amy Adams, finance spokesperson for the National Party.
“If less than 50% of the property is used for income-earning purposes then the owner would have to decide between paying a CGT or not claiming deductible expenses. Either way they will be hit with more tax.”
Read more: National: CGT will make things harder for first-time home buyers
Adams said that this would discourage home-based businesses and make it harder for someone to buy a house. “Many start-ups begin at the kitchen table or in the garage of a family home,” she said. “Why penalise people who are prepared to take a risk, start a business and create jobs?
“A CGT would impose another layer of tax on many New Zealanders and drive up their costs. They deserve straight answers on what they’ll be facing but instead, the Government is prevaricating on whether the family home would be off-limits under this divisive tax.
“Bringing in one of the most onerous CGT’s in the world will do nothing to alleviate our housing shortage and will discourage New Zealanders from investing and saving.
“The Tax Working Group got advice on links between tax and the housing market and its final report is clear – tax has very little to do with housing affordability or high house prices but it may result in an increase in rents.
Adams said that the National Party remained opposed to the CGT. “National will fight the Government’s proposed tax grab every step of the way,” she said. “We will repeal a capital gains tax and we won’t introduce any new taxes in our first term.”