The sales of eight of New Zealand's most expensive homes could have last year netted the Government $24.6 million under a capital gains tax.

The calculation was made to illustrate the impact of a capital gains tax that could require home owners with more than one property to hand over up to 33 per cent of the sale profits.

Last year, property sales in New Zealand topped $50 billion.

The sale of this home at 100 Lucerne Road in Remuera may have netted the Government $2.3m under a capital gains tax. Photo / Janna Dixon
The sale of this home at 100 Lucerne Road in Remuera may have netted the Government $2.3m under a capital gains tax. Photo / Janna Dixon

As New Zealanders debate the merit of the proposals - which were part of the Tax Working Group's report released on Thursday - the Herald on Sunday calculated what it could have generated from a capital gains tax based at a 33 per cent rate from the sales of eight of the 10 most expensive house sales of 2018.

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Two of the top 10 homes would not be eligible because last year was the first time they had been sold.

Had the latest big-dollar sales been completed under a capital gains tax - and met the criteria for the tax - it might have allowed it to last year pocket a cool $4.95m in tax from the $27.5m sale of one Herne Bay waterfront mansion alone.

The home at 15 Cremorne St - which comes with helipad and boatshed - earlier sold for $12.5m in 2009, meaning its previous owners may have had to hand over a third of their $15m profit under a CGT.

The calculations showed the Government might also have netted $2.3m in taxes from the $14.6m sale of a 1920 character Remuera homestead at 100 Lucerne Rd - last year's third most expensive sale.

Other healthy deals for the Government last year could have included the $13.3m sale of a St Heliers mansion at 118 Long Dr.

With the home last selling for just $675,000 in 1982, tax on the $12.6m profit would have hit $4.1m.

The $12.2m sale of a Herne Bay home at 73 Argyle St last year may also have yielded a $3.5m tax bonanza for the Government after its last previous sale was in 1989 for $1.4m.

Owen Vaughan, editor of property website OneRoof, called the sums eye-watering but said luxury home buyers around the world were used to being slugged with high taxes.

"The investment banker who recently bought America's most expensive property - a luxury penthouse off Central Park for US$238m (NZ$347m) - will get walloped with an annual tax bill of US$8.9m (NZ$13m) because it's his second home - and he isn't New York resident," he said.

The proposed capital gains tax has drawn mixed reactions from property pundits, with some tipping it would hit owners of holiday baches, farms and lifestyle blocks and drive investors out of the market.

Under proposals released last week by the Government's Tax Working Group, people who own only one family home on a block of land no larger than 4500sq m would be exempt from the tax.

However, the Real Estate Institute of NZ said nearly all owners of lifestyle blocks would be hit by the tax because these usually sat on land parcels greater than 4500sq m.

Institute chief executive Bindi Norwell also warned a capital gains tax would drive many property investors out of the market because it would add yet another cost when they have already been hit by a raft of costly government changes.

This home at 73 Argyle Street in Herne Bay jumped from $1.4m in value in 1989 to $12.2m last year. Photo / Dean Purcell
This home at 73 Argyle Street in Herne Bay jumped from $1.4m in value in 1989 to $12.2m last year. Photo / Dean Purcell

If they sold up in large numbers, it could drive up rental prices, she said.

However, Kris Pederson, from Kris Pederson Mortgages, said although some investors could be tipped out of the market, the tax would force most to hold on to their properties rather than selling in a bid to avoid paying the tax.

Matthew Gilligan, managing director of accountancy firm Gilligan Rowe and Associates, which represents 9000 clients, said he understood why a tax was being imposed on property sales but said it needed to be simpler.

A CGT would create a mountain of costly red tape, he said.

Under the Tax Working Group's proposals, the tax would not apply retrospectively to gains in house values made before April 2021.

The Government is set to report back on its preferred capital gains tax options in April.