Property and Tax Go Hand in Hand
While New Zealand doesn't have a comprehensive capital gains tax, the sale of land is one area which has specific capital gains tax laws.
Most people are aware of the “bright-line test” which will tax properties purchased and sold within certain periods of time. However, there is an entire body of tax law which was enacted to tax a wide range of other transactions involving the sale of land. GST on the sale of properties is also a highly complicated area of law and contribute to many professional indemnity insurance claims for conveyancing lawyers, hence the need for specialist tax advice. If you own property overseas, there is an entire body of taxing provisions that can apply in addition to the usual tax obligations for New Zealand based property.
Inland Revenue has a “property compliance team” which is dedicated to investigating whether the correct tax (both GST and income tax) has been paid in relation to land and property transactions. With the new requirement to provide an IRD number at settlement, IRD knows about every property transaction in New Zealand.
These are all very common transactions, but if not dealt with correctly, can have very nasty tax consequences which could cost you more than your property. Our New Zealand tax expert, Julia Johnston, is able to assist you with specialist tax advice in relation to all aspects of the sale and purchase of land. Julia has extensive experience working with large corporate property groups, developers, construction companies, property investors and individuals to ensure this complex area of tax law is dealt with correctly and tax efficiently.
We can work with your accountant and other advisors to ensure you have all-encompassing advice and don’t get caught with an unexpected tax bill.
If you are involved in any of the following then contact our tax team for personalised advice:
- Selling land that you have owned for 5 years or less
- You are a builder and you are buying/selling land that is not part of the building business
- You are a land dealer and you are buying/selling land that is not part of the dealing business
- You are a developer and are buying/selling land that is not part of the development business
- You are buying land to “do up” and make money
- You are buying land but aim to restructure the ownership at a later date
- Selling land that has had a change to resource consent or unitary plan
- Buying or selling land that includes GST
- Considering whether to register for GST
- Undertaking a small subdivision of your land
- Subdividing your land, be it farmland, your home, investment land or otherwise
- Building another house on your land
- Buying a property that you will not live on
- Restructuring the ownership of land