Prime Minister Christopher Luxon has sold another investment property – potentially making a significant tax-free capital gain.
Records show the Grey St, Onehunga property in Auckland was last purchased in 2015 for $620,500. It was sold on 25 November. The sale price has not been made public yet but the property was advertised for $930,000. Homes.co.nz gave it an estimated value of $970,000.
That means Luxon may have made about $300,000 on the sale – although from that gain he would have had to have paid for the costs of sale, including real estate commission, and he may have had work done to the property.
Kelvin Davidson, chief property economist at CoreLogic, said if Luxon sold it for the current CoreLogic estimated value of $905,000, that would be a gain of around 45% from purchase price in 2015.
“Looking at Onehunga in general, its median value overall has gone from $723,050 in May 2015 to $1,057,100 now – also a gain of around 45%. So at face value, nothing special or spectacular here – his property just moved in line with the market.”
The current Government has unwound the 2021 tightening of the bright-line test, requiring investors to hold a property for two years to avoid an automatic tax on gains, instead of the previous 10.
But Luxon would not have been caught even by the longer test.
He purchased the property in May 2015, and the bright-line test was introduced in October that year for property purchased as of that date.
However, if he had been captured, it would have been a significant bill.
If it was assumed that Luxon netted a profit of $250,000 on the Grey St sale, that could have been tax of $97,500. The bright-line test is applied at the individual’s marginal tax rate – in Luxon’s case that would be the top tax rate of 39 percent.
In August, he sold another Grey St property for $930,000.
Luxon also sold his apartment in the Kate Sheppard complex, near Parliament.
rnz.co.nz
