Can I Flip A  Newly-Built  House? with Michael BoturCan I Flip A Newly-Built House? with Michael Botur

Hooray – welcome to PropertyPlus 500. Please spare a thought for Anita’s wonderful leadership and publishing savvy. She does great work and helps to get homes built.
Now please – return your attention to me and my ego.
I’m a property columnist; I also do a lot of fiction writing.
One of the fiction writers I idolise, Irvine Welsh, had this to say about his transition from property speculator to author in the late 1980s. “My big break was falling out of the top deck of a bus when it toppled over in a traffic accident. I received £2,000 in compensation. I secured a mortgage on an £8,000 flat in Hackney and sold it for £15,000 18 months later. I then bought a house for £17,000 in south-east London and, again, sold it for £52,000 18 months later. In three years my working capital went from zero to £40,000. I’d shown no entrepreneurial skills whatsoever; I was just exceptionally lucky to be living in London during the Eighties’ property boom. From then on I became a postcode sociologist, buying flats in emerging areas.”
Postcode sociology is affecting Whangarei right now. The city has perhaps 15 suburbs. The name of each suburb and its connotations massively affect house prices. I can testify to this.
I bought my house in Kiripaka Road, Tikipunga, in late 2015. It was very affordable partly because house prices in Tiki are lower because of the assumptions people make about the neighbourhood. The price certainly wasn’t low due to location. The location was (and still is) terrific. You can bike and walk to town, school and work easily.

At the end of 2018, I sold the house. Its location was its leading marketing factor, sort of. We couldn’t call the house Kensington even though Kensington technically started ten houses down the road. It wasn’t even on the Tikipunga plateau.
Anyway, we made a little profit on the house so I’ve had to research whether I’m guilty of ‘flipping’ the place onto the next buyer and whether that means I have to pay any tax.

Here’s the skinny on flipping houses:
- The Overseas Investment Amendment Act – which adds paperwork to every sale in NZ since the end of 2018 – now prevents overseas residents from buying most types of homes.

- The IRD says if you’re selling a residential property and one of your intentions when you bought the property was to sell it, then you’ll have tax to pay on any profit you make from its resale. The IRD will look at your history of buying and selling

- Your conveyancing lawyer has to give up details of your relationship to the buyer if they are considered to be “immediate family” (to prevent driving up sale prices then flipping the house)

- If you buy and sell a residential property within five years, you’ll pay tax on the income you earn from the sale, unless you’re selling your family (main) home or the person selling a property decides if it’s their main home and you’re entitled to an exclusion from income tax on the profit.

Anyway, back to the thrust.
There are great newly built houses at Kotata Heights in Morningside, in and around The Landing at Marsden Cove, and especially Totara Parklands in Tikipunga. We’re not affected by rules saying if buyers sell within three years, they have to pay tax of 30% on the profit, as with KiwiBuild in Auckland. So, flipping isn’t easily done, but these housing developments are being built in key areas and their value is going to go up and up. It’s worth getting on the elevator now. Maybe sell in ten years once you’ve seen some appreciation in value.
Oh, last thing: Totara Parklands is in Tikipunga, and it’s lovely. Take that, Kensington.

Michael Botur has published journalism in NZ Herald, Herald on Sunday, Sunday Star-Times and Mana and he writes a lot of fiction. He moved to Whangarei in 2015 and was ecstatic to be able to afford a house here.

Leave your comment

Commenting is not available in this weblog entry.