CHRISTOPHER LUXON; PROPERTY; TAX; SUCCESS
People sell property for a profit all the time. Should it matter if one of those people happens to be the leader of a country?
In this BALANCER, we look at the 'controversy' over New Zealand's Prime Minister Christopher Luxon, and the money he's made from selling his properties.
INTRODUCTION
Christopher Luxon has been the Prime Minster of New Zealand since November 2023.
He entered politics as a Member of Parliament in October 2020, and became the leader of the National Party in November 2021.
Before that he worked in the private sector - 18 years with the multinational consumer goods company Unilever, and eight years at Air New Zealand (seven of those as CEO).
And in all that time, he's bought some properties too.
But it's the selling of those properties - now that he's the leader of a conservative government which is opposed to introducing a capital gains tax (CGT) - which is drawing all the attention.
NEW ZEALAND DOES HAVE A FORM OF CAPITAL GAINS TAX...
... JUST NOT AN OFFICIAL ONE.
In property terms, there is something called the bright-line test.
It means that if you sell a property (one that isn't your main family home) and you sell it within a certain number of years of buying it, then you'll be taxed on any profits you make.
That certain number of years has changed multiple times in the nine-year history of the bright-line test:
- 2015: introduced at two years (National)
- 2018: extended to five years (Labour)
- 2021: extended to 10 years (Labour)
- 2024: reduced back to two years (National)
SO, DID LUXON PLAY THE SYSTEM?
That's certainly what's being inferred in some media reporting.
And for sure, the hype around the sale of Luxon's properties is largely borne out of perception that he's a rich man who's making even more money, at a time when many are struggling with the cost of living.
Now, if the five-year bright-line test was still in play, then Luxon would have been inside that period at the time of sale (for one of the properties)... and would have had a tax bill of of NZD $70,200 to contend with.
But Luxon's own government brought the period back down to two years in July 2024... which puts him well outside the bright-line period, and means he's safe from being taxed.
So the timing is definitely questionable, but he has done nothing wrong within the tax laws - and the same would have applied to any New Zealander in the same position.
SURELY NEW ZEALAND'S LEADER IS GIVEN SOMEWHERE TO LIVE?
YES, AND THAT'S WHERE THE ACTUAL CONTROVERSY WAS...
The United States has the White House... the UK has 10 Downing Street... and New Zealand has Premier House.
Located at 260 Tinakori Road in Wellington, Premier House is the official residence of New Zealand's prime minister, but since he's been in power Luxon has chosen not to live there.
But in March 2024, it was revealed Luxon was claiming a NZD $52,000 MP's living allowance, while living in his Wellington apartment - which was both rent and mortgage free.
He was the first prime minister in 34 years to claim the allowance, and initially Luxon pushed back - saying he was entitled to the allowance. But after heavy media scrutiny and public backlash, Luxon agreed to forego the allowance, and paid back the $13,000 he'd used.
Luxon eventually moved into Premier House, after it underwent some refurbishment, on 28-29 September - three weeks after the sale of his Wellington apartment.
MORE READING
Just admit it already New Zealand, we do have capital gains taxes
BUDDLE FINDLAY
18 May 2022
Coverage of former PM Jacinda Ardern's house sale
NEW ZEALAND HERALD
21 April 2018
