Mind(set) over matter

It seems that just about every political commentator has shifted their focus to full on ‘kicking the economy when it’s down’. Even property commentators (who make a living off the narrative that the economic conditions are perfect for buying) are conceding that times are tough. And the evidence stacks up – for the majority of people, it’s a tougher economic time.

Not to detract from the seriousness of the situation, but this constantly reinforced negative economic news is becoming a self-fulfilling prophecy. The link between expectations and future economic performance has been well researched (but not always well understood). Basically, if we think that tomorrow is going to be tougher than today, we are less likely to invest or spend today, thereby making it tougher for a business who in response to this reduced income, decides to pare back their spending. Indeed, when Reserve Bank Governor Adrian Orr talked about ‘engineering a recession,’ this is exactly what he meant.

None of us can immediately change the course of the economy. However, we know from history that coming out of a downturn, there will be winners and losers. There will be a number of factors that determine who will come out ahead – timing, access to opportunities, access to capital and not least of all – luck. But perhaps the biggest factor that doesn’t get enough attention: our mindset.

Indeed, when our debt repayments are harder, business is slower and everything that we hear is negative, it’s tough to keep our minds focused. However, our mindset is one of the few factors that we have a reasonable level of control over that has a massive effect on our future success.

How do you change your view of the world? This article covers it well. Yes, it’s a tad cheesy, but the message is on point.

Feeling a bit lost and not sure how to move forward? Get in touch.

Another round of Brightline changes

July brings with it another round of changes to taxation on residential property. Namely, the Brightline Test has been changed from the former setting of 10 years (or possibly 5 years, depending on the acquisition date) back to the original setting of 2 years. Spare a thought for us as this is the 4th round of changes to a regime that is in tax terms, relatively new.

The result of this change is that for properties that are sold from the 1st of July onwards (as in; today), the brightline period will be 2 years. Or to put it simply, any gain on disposal will be taxable if you have owned it for less than 2 years. Careful through, there remains some fish-hooks around what constitutes your purchase and sale dates –so please check with us if you’re not sure!

Will this be the final word on the Brightline and taxation of residential property? Unfortunately, this has become a politicised topic, so expect more changes!

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