Tax on capital gains 15 Aug 2016

Are capital gains taxable?Yes, in some circumstances they are.

For example, if you buy a property with the intention of selling it for a profit, regardless of how long you have had it, that profit is taxable.

We noted an article in a national daily paper dated 13 July concerning interest-only loans. The Reserve Bank says 40% of loans are interest-only and 47% of loans are to investors.

If you buy a rental property and finance it substantially with an interest-only loan and don’t make any effort to reduce the debt, some – including Inland Revenue – might argue your investment was made with the intention of getting a capital gain.   That would mean your gain, when you sell, might be taxable. There may be other valid reasons why the debt is structured this way. Just be careful.

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