Its official - gift duty will be abolished on 1 October 2011.
This means that any person can gift any amount at any time. Previously individuals had to pay gift duty to the IRD if they gifted more than $27,000 in any calendar year.
If you have a trust and have been gifitng over time, you may now be able to gift the balance in one go. For others, now is a good time to form a trust and gift your assets. And there are those that simply want to transfer their home or other assets to their children and they will be able to do that without too much difficulty.
BUT there are still going to be ways that creditors, spouses and the government can "claw back" the assets that have been gifted. If you have creditors at the time of the gift and get behind in payments, they may be able to access the funds from the donee (entity who received the gift). If you have gifted in order to prevent your spouse getting a share of the assets, there are other means of your spouse getting a share. If you need to go into care, you are not likely to be eligible for rest home subsidies if you have gifted your assets away (and this one applies to any gifts made in your lifetime - not just within a certain period before you go into care).
Whether to gift in a lump sum or not is an important decision and you need to consider the effects of the gift carefully. We've attended all the seminars and read all the information on this topic so can provide the advice you need to make an informed decision.
13 Sep 11 - Paula Lines
The Ministry of the Environment has confirmed that Rotorua has one of the worst readings for air pollution in the
The Air Quality Control Bylaw has been implemented by the
A "solid fuel burner" includes open fires, freestanding or built-in wood burners, pellet fires, potbelly stoves and coal ranges, water heaters or central heating units, multi-fuel (coal/wood and waste burning systems) and similar appliances.
So what are the new rules that homeowners in the Rotorua Urban Airshed will need to comply with:
1. New Burner Rule
Under this rule, you will only be allowed to install an approved wood burner or pellet fire. The rule came into force on 1 December 2010. A list of approved applicances is at: http://www.mfe.govt.nz/laws/standards/woodburners/authorised-woodburners.html
2. Point of Sale Rule
From 1 May 2012 when you sell a property in the Rotorua Urban Airshed you will be required to remove any non-compliant burner and decommission any working open fire. You will not be required to install a new heating source.
3. Open Fire Rule
From 1 May 2015 there will be a complete ban on using any indoor open fire within the Rotorua Urban Airshed.
All of this looks like it may cost homeowners a lot of money to become compliant. Fortunately Environment Bay of Plenty has developed the Hot Swap Loan scheme whereby affected homeowners may apply for a loan of up to $4,000.00 to upgrade their heating source. The loan is interest free but must be repaid in full within 10 years. Check out this site for more information: http://www.hotswap.co.nz/.
You may also be eligible for subsidies to upgrade the insulation in your home through the EECA EnergywiseTM
program. Call 0800 749 782 or visit www.energywise.govt.nzfor more information.
04 Mar 11 - Anne Ludgate
We strongly believe that anyone with assets in NZ or with children should have a Will and Enduring Powers of Attorney. The advice in this article is meant for everyone. BUT in recent times we have seen how hard it can be for those in de facto or same sex relationships when the unexpected happens and the legal documents are not in order. Read on to prevent a nasty situation arising!
WILLS
Unfortunately we are all going to die one day (but fortunately most of us don't know exactly when!). Immediately following a death is an extremely difficult time for the family grieving for their loved one. If you don't have a Will, your assets will be distributed according to the Administration Act. This provides for your spouse or partner, children, parents and sometimes siblings to receive a share of your assets depending on who is living at your death. When a couple are legally married or have had a civil union it is easy to provide the documents to prove the relationship BUT have you considered what proof there is of your relationship if you are in a de facto or same sex situation? You may not think you need to prove it but when money is involved and other family members want to share in it, they may challenge the existence of the relationship. To avoid this happening we advise you to have an up-to-date Will! Your assets will then be distributed as directed in your Will and there are much more limited circumstances in which other family can challenge the Will.
ENDURING POWERS OF ATTORNEY - Personal Care & Welfare and Property
These documents are signed during your lifetime to specify who may make decisions on your behalf if you become incapcitated. If you appoint your de facto or same sex partner, he or she will have legal evidence of his or her right to act on your behalf. Without these documents in place, that partner's voice may be drowned out by your parents or siblings who can prove they are related to you and therefore are your next of kin. We've seen a person prevented from visiting her partner in hospital on the parents' instructions and it isn't easy or nice to sort out!
It doesn't take long to sort out these documents but it does involve dealing with some issues that we'd all rather not think about. We make the process as easy as possible so contact us today to see how we can help you.
26 Jan 11 - Paula Lines
Many of the properties in and around the Rotorua region have access to this unique resource. The residential use of this geothermal resource is predominantly used for the purpose of heating.
How is residential use organised?
Most commonly each geothermal bore feeds a collective group of users. The bore will normally be located on one property and the owner of the property will be the bore owner, whilst the other members of the group will have pipes which connect their homes to the bore.
It is very important to be sure that there is collective agreement which sets out the individual and collective rights of each member of that group as well as the obligations in respect of their entitlement and the use of the collective bore. These agreements should explain how much each individual member of that group is required to contribute to the maintenance of the bore, the bore headwork’s, pipe work, insulation, heat exchangers and reinjection systems as well as their individual use.
How is that use regulated?
As with any resource the appropriate local authority, in our case Environment Bay of Plenty (“EBOP”), will be involved to ensure that our use of the resource is managed in a sustainable, fair and safe way. In order to legitimately use a bore, resource consent must be obtained from EBOP. Normally the bore owner will be in charge of this but each member of the collective will usually contribute towards the cost of that consent.
What if there is no resource consent?
If a bore is being used without the proper authorisation from EBOP the council will normally investigate and inspect the bore and pipes and will require that an application is made for resource consent. If EBOP do not consider that the bore and pipes have had the proper maintenance or any part of the system is not working efficiently or is unsafe then the users will normally be required to complete the necessary repairs or works to meet the standards set by EBOP. This can sometimes be a significant cost especially if there are parts that need replacing or the pipes need re-lagging.
EBOP will also reserve the right to de-commission any bore that does not meet its standards. Geothermal heating is normally seen as a great benefit for our residential properties, if you suddenly find that your bore is to be de-commissioned this could have a drastic impact on the value of your property.
What should you check when considering purchasing a property using geothermal?
It is important for you to properly investigate any geothermal use if you are considering purchasing a property with geothermal heating. This is to ensure that you know exactly what you are buying and what your obligations will be in the future and whether it will actually be cost effective for you. We suggest that at the very least you check the following:
Ideally your Real Estate Agent will be able to provide you with this information, but this is dependant on the vendor giving that information to them in the first place. If you cannot be provided with a copy of the resource consent for a bore you may wish to contact EBOP to check on its status. You should be aware however that if you contact EBOP and they have no record of any bore at the property this may prompt them to investigate the matter further.
07 Dec 10 - Rochelle Belworthy
Many people don’t realise that there are many options for the ownership of a property. This is a step in the purchasing process that is often overlooked and given little thought to but it is an important decision.
The most appropriate type of ownership will depend on your reasons for purchasing the property, your personal circumstances and your other assets and liabilities. To help you make this decision, below is a list of the options available and an example of when they may be suitable:
Joint Tenants – This is the most common type of ownership. It means that two or more people jointly own the property and on the death of any one of the owners, the survivors will receive the deceased’s share. Joint tenant ownership often means we do not need to obtain Probate for the deceased’s estate and can simply transfer the property to the survivors by a transmission. This is a good option if the property is the most significant asset owned and you don’t want to incur the costs of applying for probate but it does increase the value of the survivors’ assets and is not always appropriate if you have other persons who may be entitled to a share of your estate.
Tenants in common – This form of ownership allows you and others to own a property in shares, equal or unequal. Each person may technically deal with their share in the property independently of the other owners (although very few third parties would buy a half share of a property) and may give their share in the property to whomever they wish in their Will. It is an appropriate option if you are contributing unequal amounts to the purchase price or if each owner wishes to give their share of the property to someone else after their death.
Family Trust – The reasons for having a trust are often misinterpreted and many see trusts as an ownership structure for ‘rich people’ whereas there are lots of valid reasons for forming a trust. Trusts are useful where a couple have children from different relationships or want to provide for their children unequally, where their children may be in unstable relationships or at risk of creditors, where they have a child with special needs who will need to have their financial affairs managed by others, if they have a business and want to ensure their family home is protected or where they want to ensure they are eligible for rest home subsidies. The trustees’ personal names will appear on the Certificate of Title rather than the name of the Trust though.
Company – a company may be a good idea if you’re purchasing the property as an investment, if you wish to subdivide it or if you are buying it with many others.
If you have any queries about the best type of ownership for the property you are buying (or for a property you already own) we’re happy to talk you through the options and help you reach an informed decision.
Further, because we understand that buying a house can be an overwhelming experience (regardless of whether it’s your first or fifteenth property!) and that you have a million and one things to decide and arrange, we have prepared a Guide for Property Buyers which includes the steps you will need to take and the steps we take to assist you with your purchase. Please contact us for a free copy.
30 Nov 10 - Kim Holder
Since 2001 the database of land ownership has been held and accessed online rather than in regional offices. There have been strict compliance requirements for lawyers and conveyancers who are able to access the database and this has meant many changes to how you transfer or mortgage land.
Before 2004 every parcel of land in New Zealand was recorded on a paper form called a Certificate of Title that was updated manually every time it was sold or mortgaged. There were always two originals – one held by Land Information New Zealand and the other held by the owner of the property (or the bank). If the owner sold the land, he/she would give the paper Certificate of Title to his/her lawyer and would sign a paper Transfer document. Both of those documents would be handed to the buyer’s lawyer when the money was paid. The buyer’s lawyer would send the papers to the regional office of LINZ who would match it with their copy of the Certificate of Title and manually type the new owner’s details on both documents.
Once the titles were recorded on the online system (called Land Online) the copies held at
For this reason, we ask you to provide photographic identification each time we deal with land that you own. When you are buying land we need your photo ID to make sure that when you come to sell it, your name will match that on the title. The ID must be current, not expired, and must be issued by the New Zealand government or be an overseas passport. If you do not have government issued photo ID we will need you to have a friend sign a Statutory Declaration in our presence. That friend must have known you for at least 12 months and will need to certify a photo of you as they would if you were applying for a passport. The friend will also need to provide us with their NZ government issued photo ID.
We also need you to sign the transfer document in our presence so that we can satisfy ourselves that you are the person in the ID. If you can’t attend our offices, the document can be signed in front of another NZ lawyer or a Justice of the Peace. If you are overseas, it must be signed in front of a Notary Public as they are internationally recognised as witnesses.
If you are a new client and are selling your property or giving a mortgage over it, we will need to see independent evidence of your ownership of the property – this could be a rates demand, utility bill or bank statement addressed to you at the property. If you don’t live at the property we may ask for other evidence to confirm that you own it.
All of these requirements may seem like a hassle to you BUT it is ultimately for your protection. If we didn’t ask for this information and evidence there is a risk that someone could hold himself/herself out to be you to sell your property or to borrow money against it. This has happened (in the early days of the new Land Online system) and we are all doing our best to make sure it doesn’t happen again!
24 Nov 10 - Paula Lines
Will the Government abolish Gift Duty? Its been in the news a lot lately but so far the bill hasn't been introduced to Parliament so we don't know much more about it.
At the moment an individual can only gift $27,000.00 per annum without incuring gift duty. Apparantly it costs the Government a lot of money to keep track of all the gifts being made each year and they don't get a lot of income from it as few people opt to gift more and pay the duty.
If gift duty is abolished anyone will be able to transfer their assets to a Trust, company or other person without having to enter into a gifting programme. There will be ways for these assets to be clawed back though - the insolvency legislation protects creditors from gifts made while insolvent, spouses are able to use the Property (Relationships) Act and WINZ can look at previous gifts when considering an elderly person's eligibility for residential care subsidies.
Watch this space and we'll let you know more when the bill is introduced!
23 Nov 10 - Paula Lines
Many properties in Rotorua are on cross lease titles. This article explains a little more about cross lease properties so that if you're interested in buying one you know what to look for and what to ask your lawyer about.
What are you buying?
You are buying an interest in the whole property that you will own with the other owners. As an example, if there are two owners you don't own a half share each, instead you own the whole together. As an owner of the property you will be a lessor (landlord).
You are also buying a leasehold interest in the relevant house. You become a lessee (tenant) renting the house from yourself and the co-owners.
What are your obligations/restrictions?
You must ensure that you follow the rules set out in the lease. The lease is referred to on the Certificate of Title and a copy should be obtained by your lawyer so that you can keep a copy.
The lawyer should also obtain a copy of the "flats plan" as this will set out what area is your "exclusive use" area. If there is no exclusive use area then technically your co-owners could park their car right outside your bedroom window! The flats plan will also show any common areas which are for all co-owners to use.
Usually there are rules requiring you to:
It is most important that you are aware of the consequences of making any structural alterations to the exterior of the house. As with any building work you must get the relevant consents from the council but you must also get your co-owners' consent AND get a surveyor to update the flats plan so that it accurately reflects the outline of the house. This needs to be registered at Land Information New Zealand and although it is costly it will prevent this being raised as an issue when you try to sell your property!
What should you look for before buying?
Your lawyer should check both leases carefully to ensure that:
You should check that the outline of the house is accurate and that there have been no extensions to the house that have changed that outline.
19 Jul 10 - Paula Lines
For most people considering moving into residential care the main concern is what it will cost them now and in the future.
You will need to see a lawyer to get advice on the agreement and that lawyer should clearly set out the costs for you. Every village has a different form of agreement and the terms are not usually negotiable.
With most villages, you won't own the unit but instead will be granted a licence to live in it. The village management retains ownership of the unit and the fixed chattels (like the oven and dishwasher). You will take your own furniture and personal chattels.
You will usually pay an entry fee when you move into the unit. This is essentially the "purchase price" of the unit. You will also pay a monthly fee to the village and will pay for your own electricity, gas and telephone. The monthly fee covers the administration costs of running the village, the rates, the insurance of the buildings and the maintenance of the common areas. You will need to have contents insurance for your furniture.
When you move out of the village, the village will refund your entry fee less a percentage of the entry fee usually based on how long you have lived in the village (for example, 7% of the entry fee per year for the first four years). You will also have to continue paying the monthly fee until a new resident for your unit is found and they pay their entry fee.
If the unit sells to the new resident for less than you paid, you may have the difference deducted from the amount being repaid to you BUT if the unit sells for more, you usually won't get a share of the profit!
If you sign an agreement but then change your mind, you have 15 working days to cancel the agreement without incurring any penalty from the village. BUT this also means that the village is unlikely to let you move in until that period has expired.
19 Jul 10 - Paula Lines
In November 2009 a new law came into force that affects the relationship between buyers and sellers of real estate and their real estate agent.
The law is called the Real Estate Agents Act 2008 (“the Act”).
The Act requires that all people working in the real estate industry be licensed as either agents, branch managers or salespeople. Most of the people you will be dealing with will be licensed salespeople but you can check their qualification on the website http://www.reaa.govt.nz.
Selling a property
When you list a property for sale with a salesperson, they are now required to provide you with a copy of the Agency Agreement Guide. This booklet explains what you can expect from your salesperson but also what your obligations to them are. We recommend that you read the booklet and ask the salesperson any questions that you have about it BEFORE you sign the listing agreement. We are also happy to answer any questions that you may have BEFORE you sign. Either at the time of listing your property or when you are presented with offers for your property you will be given a copy of the Residential Property Sale and Purchase Agreements Guide. This booklet explains some of the standard conditions that may be in an agreement as well as the process for paying the deposit and the balance of the funds. The booklet recommends that you see your lawyer before signing an agreement and we have found that more people are seeking advice from us at that stage which has helped many avoid situations they may have inadvertently ended up in. While there may sometimes be a small fee for seeking advice at this stage, it is usually minimal compared to the costs of trying to remedy a problem after the agreement is signed.
Buying a property
To buy a property you need to present an offer to the seller on the standard form Agreement for Sale and Purchase. The salesperson will usually prepare the Agreement for you and will give you a copy of the Residential Property Sale and Purchase Agreements Guide at the time of giving you the Agreement to sign. The booklet contains as much information for buyers as it does for sellers and it is important that you read it thoroughly. The booklet recommends that you seek legal advice BEFORE signing the offer. This is to ensure that the Agreement contains the appropriate conditions and sometimes to reduce the number of conditions (making the offer more attractive) as we can search the title and attend to some other matters beforehand. Again, we have seen an increase in people seeking advice before making offers and when negotiating the terms of an agreement and it is always to their benefit.
11 Feb 10 - Paula Lines
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