26-04-2010

Property round-up

Landlords.co.nz

1. News
2. 2010
3. April

Auckland sales prices have jumped, which research company Crockers finds unusual considering the lack of sales numbers, plus IRD is looking at what it constitutes as a mortgagee sale in relation to collecting GST.

Auckland price jump surprising

While sales numbers in Auckland tracked almost exactly against 2009 levels, a major jump in median prices for March was surprising, according to Crockers.

"A moderate jump is ‘normal' at this time of year, but the 5% leap on February's median price is surprising and something not seen since 2005."

The median sales price was also up 9% on March last year at $475,000.

Crockers says the continued recovery of up-market areas in Auckland City and North Shore City are the main sources of recent price rises, with Papakura also climbing out of the late 2008 trough.

"Nation-wide movements were more moderate, delivering a ‘mere' 3% rise on February price levels and an 8% year-on-year lift for a national median price of $360,500, total sales however fell 8%," the company said.

IRD honing in on GST collected from mortgagee sales

The Inland Revenue Department (IRD) is currently looking at what it deems to be a mortgagee sale in relation to claiming GST, to close a gap in the system.

At present the Goods and Services Act has powers for the IRD to claim GST from insolvent landowners who make a mortgagee sale.

However, there are ways of making a mortgagee sale look like something else, since the downturn began increasing numbers of people are using these.

The proposal here is the IRD would have powers to "deem" something a mortgagee sale if it has all or some of the following characteristics:

• a mortgagee taking control of, or inducing the sale of, the property by exercising a power under a contract with a mortgagor
• a mortgagee signing the sale and purchase agreement, or requesting the mortgagor to sign the sale and purchase agreement as already negotiated by the mortgagee
• a mortgagee organising services related to selling the property, such as building, conveyancing, auctioning or advertising services
• a mortgagee paying directly for the services related to selling the property
• a mortgagor's solicitor also being the mortgagee's solicitor
• a purchaser being associated with the mortgagee.

Source: Landlords.co.nz