The capital value (CV) hikes in 2014 resulted in huge rates bills for many unhappy homeowners in Auckland. Seven thousand property owners successfully challenged their CVs and have had their rates reduced.
NZHerald have reported one owner’s challenge has saved her $16,000 in annual rates from $50,000 down to $34,000. Her two Parnell properties CVs combined were $19.5m and after her challenge ended up $13.5m.
Among the seven thousand property owners are property investors. Rates are an expense covered by the rental income. A successful challenge can result in a reduced rates bill thereby improving the cashflow generated by the investment for the property investor.
An escalating annual rates bill impacts on the profitability of the property therefore the optimum yield on purchase is seven percent. That is seven percent of the purchase price which is near impossible to achieve in the most areas of Auckland since the hikes in property values.
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