Government is extending the amount of time for which investment properties must be held before their owners can avoid capital gains tax - despite a warning that it could be bad news for renters. Revenue Minister Stuart Nash confirmed the "bright-line" test would be extended from two years to five in legislation working through Parliament. "The extension of the previous government's bright-line test will help dampen property speculation and make homes more affordable," Nash said.He said reducing speculative demand would help to improve affordability for owner-occupiers. But in an impact assessment, Inland Revenue and Treasury officials warned there was a risk of "lock-in" as a result of the change, which could reduce the number of dwellings for sale. "If the fall in the number of dwellings for sale exceeds the reduced demand from speculators and investors then this could lead to increased competition for the housing stock available for purchase for a period of time." They said there was a risk that rents could rise if the law change reduced the number of investors buying and renting out property. "A higher level of home-ownership among former renters is unlikely to completely offset the pressure on rental prices. This is because owner-occupied homes typically have a lower occupancy rate than rental homes, so the reduction in the supply of rental housing (caused by some investors exiting the market) will probably outweigh the reduction in demand for rentals (as some renters purchase homes)." Gareth Kiernan, chief forecaster at Infometrics, said the rule change would make a difference. A two-year limit would stop people who were flicking properties on in a speculative boom, but two years was not a long time to have to plan to hold a property. "With five years, that's quite a long-term decision you're making there." Cameron Bagrie, of Bagrie Economics, said it should be seen in the context of wider structural changes to the market as the Government changed migration settings, reassessed the tax system, and pushed ahead with its building project KiwiBuild, as the banks' attitude to lending changed. "There's a lot of uncertainty in regard to how that's going to impact the market." The extension from two to five years would make a difference, he said, but it had to be seen in context. Source; Stuff For more than 30 years Twiss-Keir Realty has worked alongside, and invested in, the Canterbury community, successfully negotiating tens of thousands of sales for its clients. Little wonder it is known as your home for local property. Harcourts Twiss-Keir Realty, have offices strategically located in Belfast, Hanmer Springs, Hornby, Kaiapoi, Rangiora, Rolleston and The Palms.
As experienced negotiators, you may be surprised to know that for us there are some things that are never negotiable and that’s because our success is down to our commitment to a few very simple rules.
We are also unique in having experts in a wide range of specific property types through Harcourts Developments – a specifically designed service that specialises in marketing larger and more complex property projects. So whether you’re developing a subdivision, looking to market your viticulture business, sell the farm or sell or lease a commercial proposition, we have the experts to make it happen. Twiss-Keir does specific, not generic, so positioning your property so it lands exactly in front of your target market is the job of our marketing department, offering tailored marketing options that maximise the unique attributes to get the outstanding result we both want and expect. When you need good people getting good results then it’s time to talk to us. Phone 0800 789 1011 or visit our website www.twisskeir.co.nz. Buying an existing business is sometimes preferable to establishing one from scratch. This article gives some pointers (but not an exhaustive list) to prospective purchasers to help you with this process.
There are many positive aspects in purchasing a small business. The most important aspect of the Agreement is the price which you are paying, and it’s important to ensure that this price is backed up by the proven profitability of the business. We strongly recommend that you have an accountant review the financial information before you sign on the dotted line. Be sure that the business which you are taking over on the settlement date is the business which you have purchased. Talk with your local NAI Harcourts Business Broker and seek independent advice at this initial stage – they may be able to help you spot trouble before you commit. Taking the time to visit the business premises can also give you a feel for the real atmosphere and dynamics within an organisation that the balance sheet doesn’t necessarily provide. Most small businesses often rely heavily on key personnel and you need to know who those key people are, and if necessary incorporate a provision in the Agreement to cover their continued employment situation. Enthusiastic and experienced employees can make or break a business. Getting employment clauses right in a business sale and purchase agreement can also help you avoid difficult and unnecessary problems. Your local NAI Harcourts agent can help with this process but you also need to obtain independent legal advice. Buying the company v buying the business You should consider establishing a new entity to run the business to minimise the risk of inheriting company debts, contracts and liabilities that may not have been disclosed to you. This also separates out your business venture from any existing companies that you own. The cost of incorporating a company is relatively small and enables you to tailor the constitution and ownership to your own needs. If the company name is the business name you want to retain, you should negotiate for the vendor to change their company name and free up that name for your use. Restraint of trade clauses will bind the vendor company but not the vendor’s directors, shareholders or employees unless they enter a separate deed. As with key personnel, make sure that you are tying in the commitment of those who can help you set up the business for success. Premises Buying a successful business is only part of the equation – in most cases you need a place to do business. If you lease premises, this is often the biggest cost and the longest commitment involved in the business. Make sure that you are comfortable with the terms and length of the lease, the outgoings and all the fine print. Be aware that it may be possible to negotiate a variation of lease or further rights of renewal as a condition of the purchase. Depending on the nature of your business, this can be the best investment that you make. If location is important, check that you have sufficient rights of renewal. The Sale and Purchase Agreement The wording of the Agreement is important for your protection. Minor errors in an Agreement can lead to huge financial cost – this is not the place to cut corners! Working with your local NAI Harcourts Business Broker and seeking independent legal advice in the negotiation stage (before you sign!) can help avoid unnecessary conflict or unrealistic timeframes. After the Agreement is signed, map out a timeline of all the matters to attend to before settlement and allow yourself some extra time to double check at each step rather than lock yourself into a timeline that is inflexible or creates unnecessary pressure. If you’re thinking about buying an existing business, invest some time and talk with your local NAI Harcourts Business Broker and seek independent legal advice early on – it will add value to your purchase. |
James Twiss
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Greg Roberts
Licensed Business Owner of Harcourts Four Seasons Realty 2017 Ltd Archives
September 2020
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