Capital Gain Villages
Understanding Capital Gains in New Zealand Retirement Villages
Retirement villages in New Zealand are changing the way they handle capital gains, making them more financially appealing for retirees. Some villages now offer residents a share—or even the full amount—of the profit when their property increases in value. This shift gives retirees not just a place to live, but also a potential investment opportunity.
What Are Capital Gains?
Capital gains refer to the increase in value of an asset over time. In the case of retirement villages, this means the rise in price of a resident's unit or villa. Traditionally, when a unit was sold, the retirement village operators kept any profit made. However, some villages are now allowing residents to keep part or all of these gains.
Different Approaches to Capital Gains
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Karaka Pines Villages – This village stands out by giving residents 100% of the capital gains when they sell their unit. This means that any increase in the property’s value goes straight to the resident, rather than the village operators.
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Fletcher Building’s Vivid Living Villages – Located in Auckland, these villages follow a 50/50 split model, where the resident gets half of the capital gains while the village keeps the other half. This approach balances financial returns for residents with the cost of maintaining the village.
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Cambridge Resthaven – This village also follows a 50/50 model, sharing capital gains equally between the resident and the village. This setup ensures that both the community and the resident benefit financially.
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Hopper Living (villages) – They offer the unique opportunity for residents to share in the capital gains, creating a true sense of partnership between Hopper Living and those who call their Villages home, which resident have a share in 50-74% of the capital gain.
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Freedom Lifestyle Villages – Offer a share of capital gain of over 75%
Other villages (or providers) that offer capital gains are Parkwood Retirement Village, St Patrick's Village, Stonehave Village trust, Perry Foundation, Tamahere Eventide Home Trust, Tainui Trust, Riverdeen Park, Kapiti Retirement Trust, Lochlea Lifestyle Resort, Wellington Catholic Homes, Taita Home Trust Board and Integrity Care Group - Olive Estate.
What to Consider Before Choosing a Village
When deciding on a retirement village, potential residents should keep the following financial factors in mind:
- Percentage of Capital Gains Shared – Some villages let residents keep all capital gains, while others share profits. Knowing how much you’ll receive is crucial for long-term financial planning.
- Deferred Management Fees – Villages deduct fees from capital gains, which can reduce the final profit or refurblishment costs to have the unit restored to as new condition.
- Contract Details – The contract will outline how capital gains are calculated and divided. It’s important to read these terms carefully to avoid surprises later.
The Future of Retirement Villages
As New Zealand’s population ages, more people are looking for retirement villages that offer financial benefits. Villages that provide fair and transparent capital gains policies are becoming more popular. These financial models not only make retirement living more attractive but also help retirees feel financially secure.
Understanding capital gains policies in retirement villages is an essential part of making a smart decision for the future. With more options available, retirees now have a better chance of finding a village that meets both their lifestyle and financial needs.
