Misc

Property problems: Tax law on property transactions complex

Q. Last October, the IRD warned investors to check out the tax implications before buying real estate property purely to sell it on for a quick profit. I realise that if I buy property which I hope to resell at a profit in the short term, the profit will be taxable.

What if I buy one or more properties for long-term rental purposes and occasionally buy a property for a quick sa

Monday, March 29th 2004

le? Will I be taxable on any (capital) gain on the eventual resale of any of the long-term rental properties?

A. As the IRD's October media release states, the tax law on property transactions is complex and people need to seek professional advice.

At its simplest, where real property is bought to resell, any profit realised on sale is subject to tax.

Conversely, if such a property is sold at a loss, that loss is deductible (although documentary evidence that the property was bought for the purpose or intention of resale may be required to support the deduction). Incidentally, this is also the case if it is personal property, not land which is bought and sold.

Even if a particular piece of land was not purchased for resale but for a long-term hold (say, to rent), and the property is resold within 10 years, any gain on the sale (over cost) may be taxed.

Read More - Opens in a new window
Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
TSB Special 6.75
Westpac Special 6.75
China Construction Bank 6.75
ASB Bank 6.75
ICBC 6.75
AIA - Go Home Loans 6.75
Kiwibank Special 6.79
Co-operative Bank - Owner Occ 6.79
ANZ Special 6.79
ASB Bank 6.39
Westpac Special 6.39
AIA - Go Home Loans 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.