The idea came from the team reviewing the New Zealand tax system at the behest of the Labour-Alliance government which is chaired by Rob McLeod, managing partner at accountancy firm Arthur Andersen.
The Real Estate Institute is welcoming "the outbreak of common sense" from the politicians.
The McLeod team "clearly believes that New Zealanders should be discouraged from buying the family home in favour of other alternative forms of saving. This view is much favoured among the managed funds industry but has few friends elsewhere," says institute president Rex Hadley.
The McLeod team’s argument is that owner-occupied housing is tax free and, because other forms of investment are taxed, people tend to invest more in housing than they would otherwise.
Hadley says most New Zealanders aspire to own their own home for a variety of practical reasons, including providing a home for their family as well as acquiring equity and using it for such purposes as borrowing to fund a business or some other investment for their retirement.
"It is hard to take seriously the view that investors are motivated to buy their own homes because of inconsistent (tax) treatment of different savings vehicles," Hadley says. "I think such investors are so rare as to be almost extinct."
