Budget 2015: Property Related Initiatives

Finance Minister Bill English

Many of the property related initiatives have been heralded in recent days, but here is a summary of today’s pronouncements:

Budget 2015 includes the following housing initiatives:

• $52 million capital contingency fund to facilitate housing development on Crown-owned land in Auckland.

• $35 million for social housing, plus around $30 million previously earmarked for capital grants through the Social Housing Fund.

• $35.3 million to improve housing outcomes for whānau Māori.

• $12.8 million for the new Te Ture Whenua Māori Network which will help Māori land owners improve the productivity of their land.

Also, the Government is taking extra steps to bolster and enforce the tax rules on property.

Subject to consultation, from 1 October this year:

• All non-residents and New Zealanders buying and selling any property other than their main home must provide a New Zealand IRD number.

• All non-resident buyers and sellers must provide their tax identification number from their home country, along with current identification requirements such as a passport.

• To ensure our full anti-money laundering rules apply to non-residents before they buy a property, non-residents must have a New Zealand bank account before they can get a New Zealand IRD number.

• A new “bright line” test will be introduced for non-residents and New Zealanders buying residential property. Under this new test, gains from residential property purchased on or after 1 October and sold within two years will be taxed unless the property is the seller’s main home, inherited from a deceased estate or sold as part of a relationship property settlement.

The Government will also investigate introducing a withholding tax for non-residents selling residential property, to be introduced mid-2016 after consultation.

The Budget provides Inland Revenue with a further $74 million for additional enforcement of tax obligations, which includes $29 million for property tax compliance.