An Auckland landlord with 12 properties is unconcerned about a CGT for himself but thinks New Zealand's 1 million-plus tenants could be in for a rough time.
"I'll sell from the grave," vowed Peter Lewis, 73, in the lead-up to the Government's capital gains tax announcement at 2pm today.
He says he doesn't expect his portfolio to be affected much at all.
People like Lewis could see big changes if rental property sales' value increase is taxed at 33 per cent. He has a $5 million to $6m south and west Auckland portfolio, housing around 50 people and which last year cost him $88,000 in repairs and maintenance.
But if all his properties were valued in 2021, he foresees little difference from today because the market has been flat for at least two years. If he does sell any, he doesn't foresee much of a tax bill, "maybe a few tens of thousands".
Lewis said the future of New Zealand's 1m-plus tenants was at stake under any CGT regime because he predicts rents will rise due to a property shortage created by landlords selling in advance of the new tax regime.
"With CGT, I would make more money," he said referring to first-home buyers who he predicts will be further locked out of the market due to a shortage of lower-priced homes.
"It's going to affect people who are trying to start out and it's going to deter them," he said, predicting those would-be home-buyers would remain as tenants.
"That means the rental shortage will get worse, prices will go up and those of us already in the market would make more money," Lewis said.
CGT valuation dates could be set from around 2021.
Lewis is concerned for tenants under any CGT regime if landlords sell and rents rise. He cited statistics which showed owner-occupiers have around 2.1 people per residence compared with rental properties at around 3.8 people per residence.
But he does intend to sell a $1.1m Avondale property he bought some years ago, originally paying just $100,000.
Even with CGT, he expects the bill to be extremely minimal, anticipating the valuation to remain around the $1.1m mark in the next two years.
"I don't expect a tax credit. But I don't see the Auckland market taking off for another four to five years, so I'd expect to pay minimal tax," said Lewis, Auckland Property Investors Association vice-president.
"My places are worth $5m to $6m and I bought them from 1992 to January 2015. I'm not concerned about what they're valued at now or in the future because I'm more concerned about how much money I get each week. I've always been in it for the cash flow," said the ex-small business owner who said property value rises - not trading - was the key to wealth accumulation.
"Every time a house moves from rental to owner-occupier, 1.7 people are looking for a bridge to sleep under," said Lewis.
The self-made millionaire expects a full CGT policy to be initiated at the top tax rate of 33 per cent.
"Given the Government's track record of doing the wrong thing like, for example, KiwiBuild, I would expect them to bring in CGT and that's precisely the wrong thing to do to solve the rental property shortage, so let's do it," Lewis said.
As for the tenants who live in his properties, Lewis said none were well off: "They're truck drivers, supermarket workers, they work in factories. If I didn't house them, the Government would have to because they're working class people."