Results 1 to 10 of 10

Thread: Freehold vs Lease hold?

  1. #1
    ExPat is offline Member
    Join Date
    Feb 2006
    Posts
    85

    Default Freehold vs Lease hold?

    I'm not from the UK but the US where I've never heard of the terms freehold and lease hold. What is the difference and what are the implications when buying property in NZ? Does either one come with property taxes in NZ? As a would be newly arrived immigrant would I be able to buy either one?


    Thanks,
    Expat

  2. #2
    Taffy's Avatar
    Taffy is offline He who shall be ignored
    Join Date
    May 2004
    Location
    Hamilton, NZ
    Posts
    3,408
    Blog Entries
    5

    Default Freehold vs Lease hold?

    Freehold (called 'Fee Simple' here) and Leashold refer to the land your property is on. If your house is on Freehold land then you own the land. If you house is on Leasehold land, then you just own the house and do not own the land (you lease it instead) and will most likely have to pay ground rent.

    There are very few leasehold properties around in NZ, those that are seem to be on ground owned by local councils or churches.

    There are no taxes on properties here, no capital gains etc.
    Taffy

    The greatest mistake you can make in life is to be continually fearing you will make one.

  3. #3
    ExPat is offline Member
    Join Date
    Feb 2006
    Posts
    85

    Default Freehold vs Lease hold?

    Thanks Taffy!

    Perhaps you can answer one more question regarding taxes in NZ. Is there a way to reduce your taxable income through tax-deferred contributions to retirement accounts or other such accounts in NZ?

    As an example, in the US if you earn $100,000/year you may opt to have up to $14,000 placed in a retirement account (for investment purposes) and reduce your income tax liability to $86,000. Additionally, you can further offset your income by claiming property taxes, standard family deductions, child tax credits, higher education expenses, any state income tax paid, medical expenses, student loan interest (for university study), child care expenses, etc. Using this strategy you effectively reduce your tax rate from 28% to about 15%.

    Is there something similar in NZ or are the income tax rates simply flat rates of 9.5%, 33% and 39% with no deductions of any kind?

    I greatly appreciate your help.

  4. #4
    Taffy's Avatar
    Taffy is offline He who shall be ignored
    Join Date
    May 2004
    Location
    Hamilton, NZ
    Posts
    3,408
    Blog Entries
    5

    Default Freehold vs Lease hold?

    As far as I'm aware, the only tax benefits available are income assessed child/family benefits. You can only claim other tax relief if you are a business and the tax you are claiming against is genuine business expenditure.

    I'm not really an expert on tax issues, so you might want to have a read at: http://www.ird.govt.nz
    Taffy

    The greatest mistake you can make in life is to be continually fearing you will make one.

  5. #5
    MotherBear's Avatar
    MotherBear is offline The missing link
    Join Date
    Jan 2005
    Location
    currently Ras al Khaimah, UAE, ex Wales, UK
    Posts
    11,180
    Blog Entries
    1

    Default Re: Freehold vs Lease hold?

    As a would be newly arrived immigrant would I be able to buy either one?
    Yes, you can buy property in NZ very easily. We did it and we aren't even immigrants (yet!). I would hasten to mention that, in our case and solely because the land was bigger than the 2000 sq. mtr. that non-PR holders are allowed to buy, Taffy acted on our behalf. However, there's no reason why you or anyone else can't buy property there if you keep within the restraints. Once you have PR it would release you from these restraints.
    Mother Bear

    Try to bloom wherever you are planted.

  6. #6
    NickampJacky Guest

    Default Freehold vs Lease hold?

    Where we have been studying house prices (Nelson & Bays), there is a large number of lease-hold properties in the Motueka area. These appear to be +/- $100k cheaper that freehold. One would assume that the $100k is roughly the value of the section. How much rent was payable for the lease wasnt mentioned much in the real estate ads - but I would guess it would be in proportion to the land value.

  7. #7
    Taffy's Avatar
    Taffy is offline He who shall be ignored
    Join Date
    May 2004
    Location
    Hamilton, NZ
    Posts
    3,408
    Blog Entries
    5

    Default Freehold vs Lease hold?

    We saw a house in Hamilton for sale that was leasehold, the ground rent was something like $1200 a year, but the house was only $60,000 to buy!

    It wasn't a nice house though, bit of a wooden shack ::)
    Taffy

    The greatest mistake you can make in life is to be continually fearing you will make one.

  8. #8
    selchie's Avatar
    selchie is offline All Knowing Deity
    Join Date
    May 2005
    Location
    Behind the Redwood Curtain
    Posts
    2,010
    Blog Entries
    15

    Default Freehold vs Lease hold?

    It seems that with a leasehold property, you'd have more restrictions on what improvements you can make. n'est pas?

    Nice to know about the lack of property tax. No capital gains, either? Wow - good for property investors.
    If men had wings and bore black feathers, few of them would be clever enough to be crows.
    - Rev. Henry Ward Beecher, mid-1800s

  9. #9
    ExPat is offline Member
    Join Date
    Feb 2006
    Posts
    85

    Default Freehold vs Lease hold?

    I thought I read somewhere that you needed to own property for 10 years in NZ before the capital gains were considered tax free. Is this correct? I don't remember which NZ website I read that on.

  10. #10
    Taffy's Avatar
    Taffy is offline He who shall be ignored
    Join Date
    May 2004
    Location
    Hamilton, NZ
    Posts
    3,408
    Blog Entries
    5

    Default Freehold vs Lease hold?

    It will be on the IRD website for sure, but from my research it all seems to point to there being no CGT on property at all.
    Taffy

    The greatest mistake you can make in life is to be continually fearing you will make one.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46