They’re considering moving towards rates based on land value, rather than land+improvements. Land value tax seems to be all the rage lately.
If you are wondering: LVT = Taxing the value of the land instead of the buildings and everything on it (Capital Value / CV) which encourages people to improve the land and revitalise the city instead of just sitting on empty lots or dilapidated buildings waiting for the land value to go up (land banking). This usually leads to more housing and lower prices and generally a better vibe.
☝️ After reading the comments I realised we were all talking about it like everyone knows what it is so I just dropped this here for anyone that stumbles by.
The extra stupid part of CV is that improvements wear out and depreciate… yet the house I live was probably built for $40k in the 80’s and is CV’d at ten time that.
Apparently I’m taxed based on the replacement cost, which is only of practical importance to my insurer.
Your CV should be split into land value and improvements value (which I believe also includes landscaping, retaining walls, etc). So you can see what the council thinks it’s worth.
Inflation has devalued the dollar significantly since 1980. $40k in 1980 had the purchasing power of about $240k now. I would fully expect that the CV would have your improvements at much less than that.
Our previous house was a 4 bedroom 50s house that had been extended multiple times from the original state house, and it was valued at around $700k or something. Of that, the improvements were valued at $80k and the rest was the land value. Replacement cost would have easily been hundreds of thousands.
Improvements are apparently double that according to my rates valuation breakdown. In Auckland.
It’s ridiculous.
I did contact the council about it once (the dispute my valuation option) and got nothing but silence.
That is odd. Valuations are quite subjective at the best of times, and council valuations are done without seeing the property so they are basically made up. But I am very surprised to find an 80s house saying the improvement value is as much as building it again.
You could probably contact the council outside of that process and ask how to get revalued. But I am not sure that the improvement value vs land value is important as rates are normally based on the overall value. And if any of these land value based policies get implemented you might be happy the council has the split wrong 😋
Admittedly, I didn’t mind paying rates. The value for money is good and I’d happily pay a bit more too is it means better services and support for those who can’t pay.
This is pretty crazy. In Japan housing depreciates: https://www.youtube.com/watch?v=yxbXIobbxXU
About ten maybe fifteen years ago the government disallowed accounting for depreciation on residential property improvements to try and calm the investment market.
You can still do it for commercial property improvements.
Crapping up the economy just to avoid a CGT.
Hmmmm.
I don’t live there anymore; do they already split land and improvements like they do in Taupō?
Yeah they do. But its relatively skewed towqrds improvement rather than land. Makes it less attractive to develop.
Cheers.
https://www.opportunity.org.nz/tax-reset
Tax land not improvements…Opportunity policy is looking popular. Encourage development.
The Hutt Valley does this, they have a land and improvement value. I’m not sure what the split is though.
Finally.
