Election 2014: No capital gains tax on family home - Labour

Labour Party housing spokeperson Phil Twyford (left) and Labour Party leader David Cunliffe talk to media. Photo / APN

Labour will not impose Capital Gains Tax on a family home and its spokesman has reiterated that firmly after Tuesday night's leaders' debate when David Cunliffe refused to answer PM John Key's question about trust ownership of houses.

Phil Twyford, Labour's housing, Auckland, Transport and associate environment spokesman, addressed the issue in a Herald video.

"Our policy is plain and simple, it always has been. If it's the family home, capital gains tax doesn't apply."

He predicted $25 million annual revenue from the tax in its first year "but by the end of the sixth year, $1 billion a year so it will make a significant difference and go some way to taking the speculative heat out of the property market but there's also an issue of fairness with the Capital Gains Tax. While people make their money from buying and selling assets, why shouldn't they pay their fair share?" he asked of housing speculators.

"It's a mainstream part of the tax tool box for every other OECD country bar two other than New Zealand so we're really an outlier," Twyford said on the video.

Labour would also ban foreigners from speculating on the housing market and Twyford said this would be straight forward.

"What will happen is that the solicitor will have to certify in the purchase agreement that the purchaser is either a citizen or a resident. If it's a trust or a company, we'll look through and apply the same threshold that the Overseas Investment Office applies," he said.

"We think this will make a difference. We don't think there's any upside for New Zealand or New Zealanders having speculators on the other side of the world trading in our houses simply for capital gain," he said.