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May 28

New Rules for Foreigners buying New Zealand Property

On 16 May, the New Zealand Finance Minister announced that from 1 October 2015, gains on residential property in New Zealand sold within two years of purchase will be subject to a new “bright line” test, which will be introduced in respect of residential property. There will be a rebuttable presumption that if you sell property within two years of buying it, you did it to make a profit. This means that you are presumed not to hold it on capital account. Instead you hold it in the nature of trading stock and therefore any profit is fully taxable. There will be only narrow grounds for rebuttal.

Non-resident buyers must have a New Zealand bank account and Inland Revenue tax identification number. They also must disclose their tax identification number from their home country.

Exceptions to the bright line test are:

  • The property is the seller’s main home
  • The property is the seller’s main home
  • The property was inherited from a deceased estate or
  • The acquisition was pursuant to a relationship property settlement
  • The New Zealand Government will investigate introducing a withholding tax for non residents selling residential property from mid 2016.

 

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CONSULTING ACCOUNTANTS . TAXATION SPECIALISTS . BUSINESS IMPROVEMENT