How the Greens asset tax will hit you

Most media attention has been on the Greens policy to tax any net assets you have over $2 million at 2.5%. You may think you’re safe as your net assets are less than that. Not so. If you have any assets in a trust, then those assets will be taxed at 1.5% from the very […]

The post How the Greens asset tax will hit you first appeared on Kiwiblog.

Most media attention has been on the Greens policy to tax any net assets you have over $2 million at 2.5%. You may think you’re safe as your net assets are less than that.

Not so.

If you have any assets in a trust, then those assets will be taxed at 1.5% from the very first dollar, and even worse it will be on gross assets, not net assets.

Let’s say you have a $1.2 million house with a $1 million mortgage, and it is in your family trust. You will pay 1.5% on $1.2 million every year, which is $18,000 a year on equity of $200,000.

This asset tax will not hit the very well off. Anyone with a trust is screwed.

The median level of assets for a household in the 2nd top quintile (so 20% of households) is $920,000 and in the top quintile is $2,256,000. So if any of those household have assets in a trust, they will be paying 1.5% a year on those assets – regardless of their liabilities.

So the two important things to remember is that the Green Party policy is that if you have any assets in a trust, they will tax you on them from the first dollar, and the tax will be on gross, not net, assets.

The post How the Greens asset tax will hit you first appeared on Kiwiblog.