PHOTO: Prime Minister Christopher Luxon. RNZ
Prime Minister Christopher Luxon Sells Another Investment Property in Mortgage-Free Portfolio
Prime Minister Christopher Luxon has listed another of his rental properties for sale, marking the third property in his mortgage-free portfolio that he’s moved to sell in recent months. The two-bedroom home in Onehunga, Auckland, was listed for sale on Friday, with an auction scheduled for October 31. Luxon purchased the property in 2015 for $620,500, and its current market valuation is approximately $995,000, according to Homes.co.nz.
Prime Minister Christopher Luxon is making plenty of tax-free $ on property sales
Recent Property Sales
This is the third property Luxon has listed for sale within the last three months. In September, he sold another two-bedroom unit in the same Onehunga housing development for $930,000, along with his Wellington apartment, which sold for $975,000. Both properties sold for more than he originally paid—$130,000 more for the Onehunga unit and $180,000 more for the Wellington apartment.
These sales reduce Luxon’s publicly disclosed property portfolio to four mortgage-free properties. His remaining holdings include another rental property in Onehunga, family homes in the affluent suburbs of Remuera and Waiheke Island, and his Botany electorate office, which Parliament rents for $3,750 per month, a sum allowable under parliamentary rules.
Controversy Around Property Sales
Luxon has generally declined to comment on his property sales, with a spokesperson stating that the management of his investments is a private matter unrelated to his role as prime minister. However, his wealth has sparked political debate, especially around the sale of his Wellington apartment, which occurred after his government introduced changes to the bright-line test for taxing property sales.
Under the previous bright-line test, any capital gain from selling an investment property within five years of purchase would be taxed. Since Luxon purchased the Wellington apartment between 2018 and 2021, the old rules would have applied. However, the government lowered the bright-line test threshold to two years in July 2023, which meant Luxon’s apartment sale was not subject to this tax.
Labour Deputy Leader Carmel Sepuloni recently criticized Luxon, calling him a “high-profile example” of untaxed income, alleging he profited by nearly $500,000 through the sale of two properties in a short time without paying tax.
Property Expert Insights
Real estate and property experts have pointed out that Luxon’s capital gains may not be as substantial as they seem when factoring in associated costs. Wellington real estate agent John Kettle, who appraised the value of Luxon’s Wellington apartment, noted that significant improvements were made to the property, which would have affected the final sale price.
Economist Ed McKnight from Opes Partners suggested that the actual capital gain Luxon made on the Wellington apartment may be closer to $70,000 after considering property improvement costs and sale fees, which can amount to 5% of the property’s value. McKnight also stated that had the old bright-line rules been in place, Luxon likely would have chosen to rent the apartment for a year before selling, to avoid the tax.
SOURCE: RNZ