New Zealand should tax the profit people make when they sell an investment property.
This is called a capital gains tax. Right now, most profit from selling a rental or investment property isn't taxed. Every proposal on the table excludes the family home.
Read more, what this means and who it affectsoptional
What this actually means
At the moment, if you buy a rental for $600,000 and sell it for $800,000, that $200,000 gain is usually not taxed at all, while someone earning $200,000 from wages pays tax on every dollar. A capital gains tax would tax the profit when the property is sold, not while you hold it. Every proposal on the table exempts the home you live in.
How it works in the economy
Two arguments run in opposite directions. One says taxing wages but not property profit pushes money into housing instead of into businesses that create jobs, so taxing the gain moves investment toward the productive economy. The other says any new tax on investment reduces the total pool of money being invested, and that landlords pass costs on. Both effects are real; economists disagree about which is bigger.
The argument, both ways
Supporters say
- Someone earning money from a rental should pay tax like someone earning it from a wage.
- New Zealand is one of very few developed countries without one, and it's why so much money goes into houses rather than businesses.
- It raises revenue from a small group without touching most people's income.
Opponents say
- It's a tax on investment, and investment is what builds new houses and businesses in the first place.
- It's complicated and expensive to administer, and creates incentives to just never sell.
- Landlords will pass the cost to tenants as higher rent.
How this might affect you
If you own a rental or a bach
You'd pay tax on the profit when you sell. Labour's version is 28% of the gain, only on gains made after the start date, not on what the property has already made.
If you own only the home you live in
No direct effect. Every proposal exempts the family home. Around two-thirds of NZ households are in this position.
If you rent
Depends who's right. Supporters expect house prices to cool slightly. Opponents expect landlords to pass the cost on as rent. There's no settled evidence either way for New Zealand.
If you run a small business or farm
Labour's version excludes farms, businesses, shares and KiwiSaver. The Greens' broader version would capture more.
The numbers
Home ownership is at its lowest rate since 1951, about 65% of households, down from a 74% peak in the 1990s. Both sides cite this: supporters read it as investors crowding out first-home buyers, opponents as evidence the binding constraint is how few houses get built, which a tax does not change.
Stats NZ: Home ownership rate
Arguments above are what each side argues, not our assessment of who is right. Figures are official statistics and link to their source. To see what each party has actually committed to on this question, open where every party stands.
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