Property round-up

26 Apr 2010

Auckland sales prices have jumped, which research company Crockers finds unusual considering the lack of sales numbers, plus IRD is looking at what it constitutes as a mortgagee sale in relation to collecting GST.

Auckland price jump surprising

While sales numbers in Auckland tracked almost exactly against 2009 levels, a major jump in median prices for March was surprising, according to Crockers.

"A moderate jump is ‘normal' at this time of year, but the 5% leap on February's median price is surprising and something not seen since 2005."

The median sales price was also up 9% on March last year at $475,000.

Crockers says the continued recovery of up-market areas in Auckland City and North Shore City are the main sources of recent price rises, with Papakura also climbing out of the late 2008 trough.

"Nation-wide movements were more moderate, delivering a ‘mere' 3% rise on February price levels and an 8% year-on-year lift for a national median price of $360,500, total sales however fell 8%," the company said.

IRD honing in on GST collected from mortgagee sales

The Inland Revenue Department (IRD) is currently looking at what it deems to be a mortgagee sale in relation to claiming GST, to close a gap in the system.

At present the Goods and Services Act has powers for the IRD to claim GST from insolvent landowners who make a mortgagee sale.

However, there are ways of making a mortgagee sale look like something else, since the downturn began increasing numbers of people are using these.

The proposal here is the IRD would have powers to "deem" something a mortgagee sale if it has all or some of the following characteristics:

• a mortgagee taking control of, or inducing the sale of, the property by exercising a power under a contract with a mortgagor
• a mortgagee signing the sale and purchase agreement, or requesting the mortgagor to sign the sale and purchase agreement as already negotiated by the mortgagee
• a mortgagee organising services related to selling the property, such as building, conveyancing, auctioning or advertising services
• a mortgagee paying directly for the services related to selling the property
• a mortgagor's solicitor also being the mortgagee's solicitor
• a purchaser being associated with the mortgagee.

Source: Landlords.co.nz